- The Pulse
- Posts
- Interest Rates Are High, But Home Prices Are Even Higher
Interest Rates Are High, But Home Prices Are Even Higher
Nearly 1 In Every 10 Homes Are Worth $1M+
Michael Campbell
27 Aug
Thank you to our sponsor and partner Miint Holdings for making this newsletter free for our readers!
Miint Holdings leverages their 80 combined years of real estate and asset management experience to provide passive real estate investment opportunities to accredited and non-accredited investors.
They manage more than $50M in California commercial and residential real estate, and have become one of the most active acquirers of Midwest small-to-midsize multifamily apartments.
Want to invest with the best?
Nearly 1 In Every 10 Homes Are Worth $1M+
Despite the spike in borrowing costs, home values continue to rise across the country.
In 2019 only about 4% of all inventory reached the seven-figure mark; but since the pandemic, that number has more than doubled. To date, the share of U.S. homes worth at least a million dollars or more has risen to 8.2% - just shy of the June ‘22 all-time high of 8.6%.
The Northeast has seen the largest increase in the number of million-dollar homes. Over the last year alone, there’s been a 20 - 25% surge in the number of homes that are valued at a million dollars or more throughout parts of New England, Boston , and the Bridgeport Connecticut metro area.
Contrarily, a handful West Coast major metros have experienced a drop in valuations. Seattle, San Francisco, San Diego, Oakland, Oxnard, and Los Angeles have all seen a 5 - 10% reduction in million-dollar homes.
Texas and the greater Midwest region remain exceptionally affordable comparative to the other markets previously mentioned. Less than 0.5% of all homes throughout McAllen, Texas, Detroit, and Akron, Ohio meet the million-dollar mark.
Most would expect the sharp rise in mortgage rates to bring home prices lower; but instead, it’s been more of the opposite. Housing values continue to inch higher as demand still far outweighs supply.
Quick Takeaways
The Steep Rise In Borrowing Costs Has Not Drastically Effected Home Values
Nearly 1 Out of Every 10 Homes in the United States is Worth $1M+
The Northeast Has Seen the Largest Increase in the Number of Million Dollar Homes
81% of All Residential Homes in San Francisco, CA Are Worth $1M+
Texas and the Midwest Remain Relatively Affordable
Demand for Single-Family Homes Continue to Outweigh Supply
On Another Note
✺ The Apartment Sector That’s Outclassing the Competition: With interest rates remaining at a 20-Year high, renting has become more affordable than buying in many cities. This has brought vacancy rates for luxury Class A apartment buildings lower than its Class B and C counterparts; despite their higher price tag. — Connect CRE
✺ UBS Is Ordered to Pay $1.4B for Mortgage Fraud: From 2005 to 2007 the Swiss bank originated $1.5B worth of faulty loans and mortgage backed securities. It all came to a head in 2008. Now UBS will have to dish out over a billion dollars in penalties and fines for the fraud and misconduct they carried out leading up to the Global Financial Crisis. — CNBC
✺ Warren Buffet Bets Big On Home Homebuilders: Buffet’s Berkshire Hathaway recently allocated more than $800M into three of the U.S.’s largest homebuilders - DR Horton, Lennar, and NVR. — AP News
✺ Shipping Container Dormitories Have Come to Shore on College Campuses: Fisk University in Nashville, Tennessee has become the first HBCU (Historically Black College or University) to utilize up-cycled shipping containers for student-housing. — Multifamily Dive
✺ Charles Schwab Plans to Chop Jobs and Office Square Footage in Their Real Estate Department: In wake of a $500M YOY (Year Over Year) decline in net profits, the behemoth investment banking and financial services company has announced upcoming plans to reduce staffing and office space within their real estate sector. — Biznow
The Pulse Report
Finally, the missing piece to your real estate puzzle . . .
The Pulse Report provides the most important real estate insights, in real time.
It’s the data that drives the real estate market to where it’s headed next packaged in a clean, comprehensive, easy-to-read report delivered to your inbox every month.
Made for real estate investors and professionals, but also read by single-family homeowners, buyers, and sellers that want to keep their finger on The Pulse of the heart of the housing market.
The Pulse is the only quick-read weekly newsletter that always delivers fresh content, and keeps it: brief, free, and unbiased.