91Æƽâ°æ

The American obsession with a seven-figure net worth is apparent in the number of reality and game shows with million-dollar prizes. But what if you didn’t have to win Survivor to hit the jackpot? What if all it came down to was buying a house in the right place, at the right time?

Thanks to record appreciation in certain metro areas, owning a home worth a million dollars was just that easy for some homeowners in Austin, Denver, and Seattle. 91Æƽâ°æ examined the number of million-dollar single-family homes in these metro areas between 2019 and 2022 and found a staggering increase in properties worth $1M or more.

These cities are prime examples of the type of appreciation that highly sought-after areas have seen in the past three years. But while the number of million-dollar transactions is up, the median size of these homes is shrinking — reflecting the tension between rising equity for homeowners and the reduction in buying power for house hunters.Ìý

Key takeaways

• Total million-dollar home sales more than doubled between 2019 and 2022 in Austin, Denver, and Seattle.
• Newly minted million-dollar home sales in these markets have more than tripled in the same period.
• Among the markets reviewed, Austin is leading the way with the most new million-dollar homes.
• While the number of million-dollar home sales is up, the median square footage for these homes is declining — buyers of million-dollar homes today are getting less for their money than ever before.

Million-dollar home sales

The total number of million-dollar home sales are on the rise. In 91Æƽâ°æ’s markets, Austin, Denver, and Seattle have seen the biggest increase in million-dollar home transactions. While Seattle boasts the greatest number of million-dollar homes sold, Austin saw the biggest increase (over 260%)Ìý in these transactions.Ìý

Newly minted million-dollar home sales

Newly-minted million dollar homes are properties that sold for six-figures five years ago, but today are being sold for a solid seven.

For example, a home that sold for $900,000 in 2017, went on the market again in 2019 and sold for $1M, would count as newly minted. If that home sold again for $1M, or more, in 2022, it wouldn’t be classified as newly minted because it had previously transacted for seven figures.

The increase in newly minted million-dollar home sales far outpaces the increase of total million dollar homes. The over 300% increase in homes now worth a million dollars or more in these metro areas gives a snapshot of the record appreciation in home prices between 2019 and today. While those gains have driven down affordability for homebuyers, it has also meant record increases in home equity.

Related: When will home prices go down?

Median square footage of million-dollar homes

The number of seven-figure homes may be on the rise, but a million dollars isn't what it used to be. The median size of these homes has markedly shrunk in the short three-year period examined.Ìý

These numbers show that while a million-dollar home might have meant a mansion a few years ago, today more modest homes are hitting the market for seven-figures.

How much is a mortgage on a million-dollar home?

You may fantasize about living in a million-dollar home, but do you get nightmares about paying the mortgage? For those pragmatic dreamers, here’s a breakdown of what your monthly payment might look like.

The following assumes a $1,000,000 purchase price and an interest rate of 5.1%. Our calculations do not include other expenses, like property taxes or homeowners insurance, which are typically included as a part of a mortgage bill, so expect your total monthly housing costs to run higher.

How to get a million-dollar loan

If you have strong financial health, you may be eligible for a million-dollar mortgage. But you’ll have to apply for the right type of home loan. The Federal Housing Finance Agency (FHFA) sets limits for conforming and nonconforming loans, also known as jumbo loans. You can get a jumbo loan from a private lender, and government-backed programs like FHA and VA loans also extend nonconforming loans.

However, qualifying for larger loans often carry higher entry thresholds, like stellar credit scores and low DTIs. Here’s a breakdown:

Jumbo loans are mortgages for anything greater than the conforming loan limit for the area the home is located in — in 2022, approximately $647,200 or greater in most of the U.S. but as high as $970,800 or greater in some areas. These loans typically carry an interest rate one or two points higher than that of conventional loans, and borrowers will need a credit score of at least 720 and a DTI of 36% or lower.

Eligible current or former members of the U.S. Armed Services with a credit score of 640 or greater may be eligible for a VA jumbo loan. Like their jumbo loan counterparts, these loans are for an amount greater than the conforming loan limit for the area the home is located in. However, they carry lower interest rates commensurate with conforming VA loan rates and no down payment requirements for loans up to $1.5 million. Loans for $1.5 to $2 million require just a 10% down payment.

How to afford a million-dollar home

For most, a million-dollar purchase will take years to work towards, and the long road can be daunting without some guidance. Here are some tips to help you on your journey to afford a seven-figure home.

• Save for a down payment and closing costs: A down payment is an important component of any home purchase, especially for large transactions. A sizable downpayment signals to lenders and sellers that you’re serious about the home sale and it can even help you qualify for better rates and terms on your mortgage. An ideal down payment is 20% or more of the purchase price of your home, and you’ll need to save an additional 3% to 6% of the total loan amount for closing costs.
• Reduce your DTI: Your debt-to-income ratio (DTI) is an important indicator of your financial health. Lenders will consider this metric when reviewing your loan application. If you want to qualify for a million-dollar house mortgage, you’ll need a low DTI — typically less than 36%.
• Budget for maintenance: It’s one thing to buy a million-dollar house, and another thing to maintain one. Don’t let your investment depreciate by allowing it to fall into disrepair. Experts recommend budgeting 1% of your home’s value annually for maintenance fees. That means setting aside $10,000 every year for a million-dollar home.
• Plan for tax increases: When your home appreciates in value or the government raises property taxes, your taxes will rise too. That means that even if you have a fixed-rate mortgage, your monthly payments could go up (property taxes are commonly charged as a part of your mortgage bill). Be prepared for these increases over time so that you don’t end up with a mortgage you can’t afford.

Methodology

To create this report, 91Æƽâ°æ pulled home sale data from the MLS in Austin, Denver, and Seattle. To determine the number of newly minted million-dollar homes, we examined homes that transacted for $1 million or more in January to June 2019 and 2022 to homes that had previously transacted for less than $1 million within five years. Square footage data was compiled from the MLS and tax records and standardized by 91Æƽâ°æ’s data engineering team.

Raymond Liang, Senior Data Scientist at 91Æƽâ°æ, contributed to the conception, data collection, and analysis for this report.