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Trulia's McLaughlin on Rise of Million Dollar Homes (Audio) · Bloomberg Intelligence

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  Speaker 1: Bloomberg Business flash. This is taking stock with Kathleen Hayes
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  Speaker 1: and Pim Fox on Bloomberg Radio. In the world of
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  Speaker 1: residential real estate, when you use the phrase million dollar listing,
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  Speaker 1: it conjures up images of ultra wealthy house hunters looking
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  Speaker 1: for those mansions. Well, that may not be the case
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  Speaker 1: any longer today, truly. The real estate site released a
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  Speaker 1: report ranking the metro areas in the United States that
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  Speaker 1: have had the largest increases in the share of million
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  Speaker 1: dollar homes since twenty twelve. Here to tell us more
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  Speaker 1: is Ralph McLaughlin. He is the chief economist for Trulia
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  Speaker 1: dot com. Ralph tell us the results of this study
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  Speaker 1: and why it may surprise just about everyone. Well, we
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  Speaker 1: found that the metro's that had the biggest increase in
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  Speaker 1: the share a million dollar homes were right here in
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  Speaker 1: the Bay Area, in my own own backyard. In fact,
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  Speaker 1: the top three or here San Francisco, San Jose in Oakland. Uh,
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  Speaker 1: San Francisco has just game busters. Um. Four years ago
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  Speaker 1: only about homes were at the million dollar mark, and
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  Speaker 1: now it's close to sixties. So it's so it's tripled down.
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  Speaker 1: In Silicon Valley and Sutose a similar story from about
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  Speaker 1: six percent, so really big increases. Most of the metros
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  Speaker 1: that have seen the biggest increase in million dollar homes
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  Speaker 1: from the West, but New York makes a list at
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  Speaker 1: number eight, growing very modestly from about seven. So that's
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  Speaker 1: that was kind of surprised to see how many were
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  Speaker 1: out here in the West as opposed to in the northeast.
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  Speaker 1: Chris Ralph, what's interesting about these million dollar homes is
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  Speaker 1: that it's a It may be a big part of
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  Speaker 1: what's in San Francisco now, but it's a very small
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  Speaker 1: portion of California overall, or even the country overall. However,
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  Speaker 1: I think that's one of the issues in other experts
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  Speaker 1: we've talked to is the issue for California is so
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  Speaker 1: many Californians are being priced out of the housing market
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  Speaker 1: because prices have risen so much. Maybe not to a
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  Speaker 1: million dollars, but a home that used to be to
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  Speaker 1: fifty might be five thousand, etcetera. We got the existing
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  Speaker 1: home sales report today in April they were up one
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  Speaker 1: point seven about five and a half million units at
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  Speaker 1: an annual rate. Our rising home price is going to
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  Speaker 1: slow that down. What do you see broadly? Yeah, well,
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  Speaker 1: we think low inventory is really you know, slowly slowing
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  Speaker 1: me down the sales. And part of that liw inmentary
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  Speaker 1: is because in many markets prices are growing growing out
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  Speaker 1: of reach, especially growing out of reach of a middle
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  Speaker 1: class buyers. So you know, for example, you know, in
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  Speaker 1: the in the northeast New York, Boston, you know, um,
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  Speaker 1: a middle class buyer would have to spend you know,
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  Speaker 1: about the income on a home out here, it's as
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  Speaker 1: high as fifty to six. So we think that that's
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  Speaker 1: going down. But but I think the uh, you know,
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  Speaker 1: the the other issue is, um, you know, with with
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  Speaker 1: inventory being so low, it kind of creates a grim
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  Speaker 1: block effect that if it's difficult for someone to move
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  Speaker 1: into a different house because it's too expensive, they're not
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  Speaker 1: going to sell their own house, and so it creates
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  Speaker 1: this traffic jam so to speak, in the market where
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  Speaker 1: it's difficult for people to trade. And the fact that
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  Speaker 1: at this stage in the economic cycle. You know, you
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  Speaker 1: would expect home sales to be you know, a little
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  Speaker 1: little bit higher, probably over the you know, the six
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  Speaker 1: million mark Ralph You're in San Francisco, so that's home
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  Speaker 1: to Bloomberg and nine sixty am. You mentioned Boston home
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  Speaker 1: to a m New York. You looked at the concentration
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  Speaker 1: to five neighborhoods that witnessed a great increase tell us where. Yeah,
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  Speaker 1: so Brooklyn is the place to be if you're looking
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  Speaker 1: for recent million dollar homes. I was very surprised how
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  Speaker 1: concentrated it was in the New York metropolitan area, and
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  Speaker 1: many of the other markets we looked at neighborhoods were
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  Speaker 1: quite spread out. As far as those that had the
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  Speaker 1: biggest increase in million dollar homes in New York, it
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  Speaker 1: was exclusively in Brooklyn. In fact, if we look, you know,
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  Speaker 1: look at the top top five neighborhoods, Bedsty, Greenwood, Crown Heights,
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  Speaker 1: green Point, Burropark All Brooklyn all increased pretty pretty quickly.
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  Speaker 1: You know, for example, Crown Heights went from about three
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  Speaker 1: of homes at the million dollar market tow over half today.
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  Speaker 1: So that that is a remarkable increase in more than
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  Speaker 1: you know, just just what general health of the economy
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  Speaker 1: would would would suggest. But you know, for people who
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  Speaker 1: can afford to buy a million dollars homes, if you
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  Speaker 1: look at San Francisco, Santa Say, you've got people who
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  Speaker 1: work in the in the tech industry, right. Uh, if
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  Speaker 1: you can have afford to buy a million dollar plus home,
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  Speaker 1: how much does it matter to you what the prices?
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  Speaker 1: Does it? Even does financing? Does a mortgage rate ed
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  Speaker 1: to you at all? Because at that level, you've got
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  Speaker 1: a lot of means. If you can afford to buy
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  Speaker 1: a home at that price or higher, yeah, well you're
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  Speaker 1: you're certainly certainly right. So for most persons who have
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  Speaker 1: a healthy salary in the tech industry, it's not really
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  Speaker 1: that much of a problem. But you know, only seven
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  Speaker 1: of our workforces in the tech economy, so there are
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  Speaker 1: a lot of others that that don't work and many
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  Speaker 1: of them and we think are being impacted by by
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  Speaker 1: rising rising prices, And it wasn't making it difficult for
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  Speaker 1: them to get into homes, especially first time home buyers
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  Speaker 1: because oftentimes that that first time HomeBuyer price point means
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  Speaker 1: that in order to save up for that down payment,
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  Speaker 1: which could be you know, a hundred thousand dollars or so,
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  Speaker 1: um you know, could could take ten, twelve, fifteen years, Robod,
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  Speaker 1: if you could just tell us a little bit quickly
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  Speaker 1: about Miami. Yeah, so, so Miami actually didn't make the
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  Speaker 1: top ten. It was it was close. Uh, you know,
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  Speaker 1: Miami saw many many neighborhoods um you know, increasing pretty quickly,
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  Speaker 1: especially in the Fort Wauterdale area, navarea Isle. Uh. You know,
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  Speaker 1: nearly all homes now are about a million dollar mark,
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  Speaker 1: whereas four years ago only about half. But we also
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  Speaker 1: see pretty high concentrations in the downtown Miami and just
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  Speaker 1: outside downtown. We think some of that is actually driven
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  Speaker 1: by recent luxury condo development, um you know, of which
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  Speaker 1: is you know, attracting a noticeable share of actually foreign investors.
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  Speaker 1: How don't you want to hear about Seattle? Depressed me
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  Speaker 1: too much? Ralph McLaughlin, thank you for joining us chief
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  Speaker 1: economist at Trullia dot com. Million dollar homes becoming a
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  Speaker 1: lot more commonplace across the country. I'm Cathleen's along with
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  Speaker 1: Pim Fox, thank you for joining us today. Let's thank
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  Speaker 1: Reggie Basil, our technical director, and our producer Samara Linga.
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