Only three new cities were added to Zillow’s million-dollar cities list this year, signaling a market slowdown.

Zillow’s latest million-dollar cities report released on Tuesday hints the tides may finally be turning in buyers’ favor — there was a net addition of only three cities, 15 less than the year before.

Million-dollar cities are determined by the presence of neighborhoods that have a median home value of $1 million or more.

The net addition is calculated by subtracting the number of new cities that fell off the list from the number that were added. In 2019, seven new cities across California, Colorado, Tennessee, Wyoming and Virginia had neighborhoods that reached median home value of $1 million: Santa Ynez, California; Telluride, Colorado; Forest Hills, Tennessee; Sierra Madre, California; McLean, Virginia; Moose, Wyoming; and Redondo Beach, California.

Meanwhile, the typical home value dropped below the million-dollar mark in San Jose, California; San Quentin, California; Lexington Hills, California; and Laie, Hawaii. This is the first time since 2016 that any cities fell off the list.

Although it may be tempting to sound the alarm in the cities that fell off from 2018 to 2019, Zillow Director of Economic Research Skylar Olsen said people should be most concerned about the highest-ranking metros.

Skylar Olsen

“Odd though it may seem, it’s the cities at the top that are ‘struggling’ the most during this return to normalcy in the market,” Olsen said. “More than just slower growth, home values good and truly fell in many of these hubs of luxury, a sign that the excessive home value appreciation of the past several years drove prices too high — even beyond the reach of those who could afford almost anything almost anywhere else.”

San Francisco (46), New York (43), and Los Angeles (30) still dominated the list with each having more than 30 neighborhoods with median home values of $1 million or more. San Jose and Boston rounded out the top five with 10 million-dollar neighborhoods each.

If current growth trends continue, Zillow predicts Kailua, Hawaii; Milpitas, California; Harding Township, New Jersey; Daly City, California, and Fremont, California will lose their million-dollar status in 2020, while smaller cities throughout Massachusetts and California such as Edgartown and Carmel Valley make next year’s list.

The million-dollar report follows other recent economic reports published by Zillow and others that signal an impending housing boom in secondary markets where demand is high, thanks to affordable home prices and cost of living.

Markets across the South including Austin, Atlanta, Charlotte and Nashville are expected to experience home value growth above the forecasted national average of 2.8 percent.

“Having subjected buyers to a crucible of fierce competition for multiple years, many West Coast markets hit an affordability ceiling that set off declining home values in the most expensive of these,” Olsen said of the report published two weeks ago. “Indeed, this price correction — a clap back from having appreciated with too much exuberance in the recent past — pushes many previously hot markets to the bottom of our experts’ list.”

Email Marian McPherson

Are you ready for what the industry holds in 2020? Inman Connect New York is your key to unlocking opportunity in a changing market. At Connect you will gain insight into the future, discover new strategies and network with real estate’s best and brightest to accelerate your business. Create your 2020 success story at Inman Connect New York, January 28-31, 2019.

Agenda | Speakers | Past Connect Videos

Thinking of bringing your team? There are special onsite perks and discounts when you buy tickets together. Contact us to find out more.

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×