Are high-end homes losing their luster? A Zillow analysis suggests yes. But what’s really going on?

Now here’s a real crisis we can all get up in arms about.  

The U.S. has lost 58 “million-dollar” cities over the past eight months, Zillow reports. 

That is a lot of valuable real estate to have gone missing. But before you hit the panic button, we are not talking about coastal towns swept away by rising sea levels, wildfires, or anything like that. 

Rather, these are all cities, towns, suburbs and whatnot that have seen their “typical” home values sink below the seven-figure mark.  

We are now down to just 464 of these million-dollar cities, with California having experienced an apparently apocalyptic decline, losing 20, Texas and New Jersey each shedding five and Florida seeing four slip away into the night. 

And Greater Boston, home to the fifth largest collection of communities where average home values top $1 million, is no stranger to this truly disturbing trend. 

Just about overnight, we’ve lost Sudbury, one of our most cherished million-dollar towns, or so Zillow data says. 

Condolences to anyone who owns a home in the upscale western suburb – or maybe more accurately, once-upscale western suburb – for this is truly a disaster! 

Sudbury’s Safe, After All 

However, to head off a mass exodus from Sudbury – whatever you do, please, please don’t sell to any all-cash buyers! – I decided to take another look using some more solid numbers, namely those compiled by The Warren Group, publisher of this newspaper.  

Zillow has a unique and rather odd way of tracking home values, combining sales with assessed values, which tend to produce lower numbers than actual market transactions. 

The Warren Group tracks both average and median prices for every community in the state, with all data based on actual sales. 

So, first the good news. Sudbury homeowners: You are safe after all. The median sale price of a single-family home in town is now well over $1.2 million after a 13 percent year-on-year increase in February. 

The bad news? Concord, at $975,000, Winchester, at $970,000, Somerville at $850,000, and Chatham, at $800,000, have all fallen out of the million-dollar club. 

Absolutely, positively terrifying. If you have the misfortunate of owning a home in one of these hard-hit communities, my advice is sell now while you still have a chance. 

Drop in Sales Sticks Out 

OK, getting serious, home prices appear to be a bit all over the lot right now amid the spike in interest rates and economic turbulence, including signs of trouble in the banking sector. 

What sticks out right now aren’t so much the drop in home prices in some of the Boston’s area’s most coveted suburbs, but rather small a sample size we have to look at. Through the first two months of 2023, a number of the towns listed above had just a handful of single-family sales, with just six homes changing hands in Concord, nine in Somerville and 10 in Winchester. 

With so few sales, one or two particularly inexpensive homes can have a big impact on the numbers.  

What’s also pretty clear is that the surge in interest rates, combined with the above-mentioned factors, is throttling sales, though we’ll have a more complete picture when The Warren Group comes out with the March numbers in a couple weeks. 

As far as a big drop in the number of million-dollar towns goes, don’t count on it, especially here in Greater Boston. 

Scott Van Voorhis

It’s possible we will see some retreat over the next year or two in prices, including in the most expensive towns. 

But a chronic housing shortage based on decades of underbuilding all but ensures that the high prices are here to stay, with values poised to start taking off again in a year or two after a modest leveling off. 

In fact, given the rapid rate at which home prices have been galloping ahead over the past decade, we are likely headed for the day when million-dollar towns, if not the norm, aren’t particularly special either. 

Don’t think Natick, Medford or Burlington will ever become million-dollar towns? Just wait a decade. 

Scott Van Voorhis is Banker & Tradesman’s columnist; opinions expressed are his own. He may be reached at sbvanvoorhis@hotmail.com.