There is a significant transformation in the U.S. real estate market regarding $1 million homes, driven by the surge in home values during the COVID-19 pandemic. This trend has led to a substantial increase in the number of million-dollar homes, with nearly 1,650,000 homes now valued at $1 million or more, representing an increase of approximately 989,000 since the pandemic onset.

Decrease in Home Size: Despite this increase in higher-valued homes, the typical $1 million home has decreased in size by 70 square feet since 2020, emphasizing a shift in the definition of luxury. The decrease in size is most pronounced in certain areas, notably Indianapolis, where such homes have shrunk by over 1,500 square feet.

Distribution Across Metro Areas: The increase in $1 million homes varies significantly across different metropolitan areas. For instance, nine major U.S. metros have seen more than a fourfold increase in such homes, with Riverside and Richmond experiencing the most significant growth, at 5.7 and 5.2 times, respectively. Conversely, San Jose and San Francisco are exceptions, showing a decrease in the number of $1 million homes, likely due to already elevated market baselines.

Size Variations by Region: Regional disparities are notable, with the largest $1 million homes found in Indianapolis and Memphis, exceeding 5,000 square feet, while California cities like San Jose and San Francisco record the smallest with just over 1,200 square feet. This variation underscores regional differences in housing markets and costs of land and construction.

The pandemic-fueled escalation in home prices has reshaped the high-end housing market, compressing home sizes in areas where land and housing costs are highest and expanding the pool of million-dollar homes in more affordable regions. This dynamic indicates a potential shift in how wealth is perceived in real estate, where the size and features of a high-priced home may be less a focus than its location and market value.

For the real estate market, these changes signal a reevaluation of property valuations, buyer expectations, and market strategies moving forward, as the national landscape adjusts to post-pandemic economic and spatial realities. The concomitant loss of housing size amid rising house prices may also prompt new considerations in urban development and housing policy to accommodate evolving definitions of luxury and value.