The Next $1 Million Housing Markets

When we cover housing, The Juice drives home two core themes:

• No matter how the media and real estate people define this housing market, it’s not affordable. We have gone over how much it takes (around a six-figure salary) to be able to afford the median priced home in America today. That’s not good and only about to get worse. 
• Because — point two — even the last bastions of affordability are inching toward and soon will become unaffordable. 

If you require proof of our prediction, The Juice has it today in what is really a pretty startling report. 

First, some context with respect to what has already happened:

• According to the National Association of Realtors, the median price of a house in San Jose, California is $2 million. Yes, you read that right. $2,000,000. 

Using the average increase in home prices between 2014 and 2024, real estate researcher Zoocasa predicts that San Francisco will pass the $2 million median mark by 2028, Anaheim and Irvine in Orange County by 2029 and San Diego by 2033.

Crazy, but not the shocking part. You expect exorbitant prices in these notoriously expensive markets. After all, the median price of a home in San Francisco almost doubled over the last ten years, jumping from $769,600 to $1,449,000.

It’s some of the names on the list poised to hit the $1 million median mark that should strike fear in your heart. We’ll leave places such as Los Angeles (which, when you look at the entire metro area that includes Long Beach and Glendale, as we’re doing throughout this installment, will pass $1 million by 2027) out in favor of some of the more surprising names. 

• Boulder: 2026
• Austin: 2033
• Miami: 2029
• Denver: 2030
• Salt Lake City: 2031

You recall when people were moving to Austin, Denver and, most recently, Salt Lake in search of affordable homes. Soon, more than half of the properties will go for more than $1 million, if this analysis is correct. 

And we think it is. 

Even more worrisome is that the current crop of relatively affordable places probably aren’t all that far behind. Consider some names where you can currently come in at or around the national median.

• Boise: $520,000
• Reno: $535,000
• Salem (OR): $436,000
• Las Vegas: $451,000
• Eugene (OR): $511,000

Just to name a few. And these places have experienced — over the last ten years — annual average growth rates of between 11.1% and 9.3%, according to Zoocasa. 

In a separate analysis, Business Insider put Riverside, California; Manchester, New Hampshire; Portland, Oregon; Portland, Maine; Phoenix; and Wilmington, North Carolina on a list of places that will hit the $1,000,000 median mark at points between 2029 and 2034. 

The Juice agrees with all of the above. 

And here’s the even scarier thing. The only big thing we have been wrong about in our housing analysis over the last couple of years is the prediction that mortgage interest rates would come down. 

They haven’t. 

Once again, the rate on a 30-mortgage is a hair below 7.0%. Everybody was wrong when they said mortgage interest rates would come down when the Fed lowered the federal funds rate. A funny thing happened on the road to that prediction and it’s called a strong economy. 

Despite what you hear on the campaign trail, the economy is pretty strong. At least for people doing well. So, overall, the net effect is, yes, stronger-than-expected economic data on the heels of that rate decrease that is making some people wonder if the Fed should have only cut by 0.25%.

However you slice it, if you manage to come up with 20% down on a $1 million house (that’s $200,000!), the monthly payment (including taxes and insurance) on your $800,000 loan at a 6.9% 30-year mortgage rate would be $6,600. 

Of course, you’ll need solid credit to qualify for that rate and monthly income of $22,000 to afford the payment. That’s freaking $264,000 a year. 

Yes, indeed, our housing market and overall economy is a story of the haves and have nots. 

The Bottom Line: So, what to do?

For many people — even some folks who are doing well with good jobs and cash in the bank — home ownership is out of reach. At least, in cities where they’d like to live. So, The Juice says, keep renting. Even though rent isn’t cheap (unless you have a good deal), you’ll probably save money each month compared to owning a home. 

Take that money and invest it — aggressively. You can invest in real estate without ever buying property. You can even be a venture capitalist via private equity investments once available only to the 1%. We’ll hit both of these subjects (real estate and private equity as alternative investments) in The Juice tomorrow and Thursday.

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