High-valued Homes in the U.S.

In 2009, across the US 2.2 percent of homes were valued at $1 million or more[1].  More than twice that share, 4.6 percent, were valued at $750,000 or more, and more than twice that share, 11.1 percent were valued at $500,000 or more.  Looking only at the national prevalence of high-valued housing one might conclude that it is not a big part of the market, but this could be misleading.  There is substantial variation in the concentration of high priced homes across the country, and in some areas, high valued homes are a big part of the local market.

Million Dollar Homes

By Congressional district, the concentration of million-plus-dollar homes varies from more than 40 percent (CA-14) to 0.1 percent or less (PA-14, KS-4, OK-4).  Half of districts have concentrations of million dollar homes greater than 0.9 percent.  Million dollar homes make up at least one-quarter of all homes in six Congressional districts.

$750,000 Homes

Looking at homes valued at $750,000 or more, five districts have concentrations of 0.3 percent (AL-7, OK-4, KS-4, KS-1, WI-4).  On the other end of the spectrum, in four districts more than half of all homes fall into this price category (CA-14, CA 30, NY-8, NY-14), and in the California 14^th District, more than three in five homes are in this price group.  Half of all districts have a concentration of $750,000-plus priced homes greater than 1.9 percent.  Homes valued at $750,000 or more are at least a third of all homes in ten Congressional districts.

Half-Million Dollar Homes

At the low end, in five districts (TX-20, TX-29, TX-15, KS-1, AL-7) between one-half and one percent of homes are valued at $500,000 or more.  At the other extreme, three districts have concentrations above 80 percent and six districts have concentrations above 75 percent.  In other words, 3 of every 4 homes in these six districts are valued at $500,000 or more (CA-8, CA-12, CA-14, CA-30, NY-14, NY-8).  In half of districts, more than 5.5 percent of homes are valued at $500,000 or more.  In 26 districts, at least half of homes are valued at $500,000 or more.

High-valued Homes with a Mortgage

In the typical Congressional District, the difference between the share of all homes valued at $500,000 and the share of homes valued at $500,000 or more among mortgaged properties or non-mortgaged properties is zero.  Essentially, in the typical district, there is no patterned difference in the share of properties above $500,000 that are mortgaged versus without a mortgage.

The share of homes mortgaged by district varies from a low of 42.9 percent (WV-3) to a high of 87.7 percent (MD-4).  In the typical, or median, Congressional District, 69.3 percent of homes are mortgaged.  The share of high-value homes that are mortgaged varies from a low of 19.3 percent (WV-3) to a high of 88.7 percent (MD-4).  In the typical, or median, Congressional District, 69.3 percent of high-value homes are mortgaged.

Source Data and Bias

The analysis presented in this commentary is based on data from the American Community Survey, an annual survey with results based on nearly 2 million interviews.  Unlike data from Existing Home Sales (EHS) published by the National Association of Realtors® which is based on a market transaction, the survey relies on owners’ estimation of their property’s value[2], and only a subset of sampled owners would have recently completed a sale and therefore be armed with the most current knowledge of the market[3].  As a result, the national median home price in 2009 reported by the American Community Survey was $185,200.  In the same year, the median sales price of Existing Homes in the National Association of Realtors® series was $172,900.

[1] All data from the American Community Survey 2009.

[2] “About how much do you think this house and lot, apartment, or mobile home (and lot, if owned) would sell for if it were for sale?” per the ACS 2009 Questionnaire.  http://www.census.gov/acs/www/Downloads/questionnaires/2009/Quest09.pdf

[3] EHS does not include new homes.  American Community Survey data show that just under 6 percent of all homes were built in 2005 or later compared to 26 percent of homes sold built in 2005 or later in the NAR Profile of Home Buyers and Sellers.  The NAR Profile of Home Buyers and Sellers also shows that new homes were about 15 percent of sales in 2010, so the typical existing home sold is more likely to be more recently built than the typical home removing this idea as an explanation of potential upward bias in the ACS.  Comparing ACS data with NAR’s own survey data that includes new home sales, the discrepancy is somewhat reduced.  The median prices reported in NAR’s Profile of Home Buyers and Sellers were $185,000 and $179,000 in 2009 and 2010.  NAR Profile years are July to June, so a calendar year estimate for 2009 based on this data would be somewhere between the 2009 and 2010 figures.