WEBVTT - Trulia's McLaughlin on Rise of Million Dollar Homes (Audio)

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<v Speaker 1>Bloomberg Business flash. This is taking stock with Kathleen Hayes

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<v Speaker 1>and Pim Fox on Bloomberg Radio. In the world of

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<v Speaker 1>residential real estate, when you use the phrase million dollar listing,

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<v Speaker 1>it conjures up images of ultra wealthy house hunters looking

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<v Speaker 1>for those mansions. Well, that may not be the case

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<v Speaker 1>any longer today, truly. The real estate site released a

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<v Speaker 1>report ranking the metro areas in the United States that

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<v Speaker 1>have had the largest increases in the share of million

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<v Speaker 1>dollar homes since twenty twelve. Here to tell us more

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<v Speaker 1>is Ralph McLaughlin. He is the chief economist for Trulia

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<v Speaker 1>dot com. Ralph tell us the results of this study

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<v Speaker 1>and why it may surprise just about everyone. Well, we

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<v Speaker 1>found that the metro's that had the biggest increase in

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<v Speaker 1>the share a million dollar homes were right here in

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<v Speaker 1>the Bay Area, in my own own backyard. In fact,

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<v Speaker 1>the top three or here San Francisco, San Jose in Oakland. Uh,

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<v Speaker 1>San Francisco has just game busters. Um. Four years ago

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<v Speaker 1>only about homes were at the million dollar mark, and

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<v Speaker 1>now it's close to sixties. So it's so it's tripled down.

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<v Speaker 1>In Silicon Valley and Sutose a similar story from about

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<v Speaker 1>six percent, so really big increases. Most of the metros

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<v Speaker 1>that have seen the biggest increase in million dollar homes

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<v Speaker 1>from the West, but New York makes a list at

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<v Speaker 1>number eight, growing very modestly from about seven. So that's

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<v Speaker 1>that was kind of surprised to see how many were

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<v Speaker 1>out here in the West as opposed to in the northeast.

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<v Speaker 1>Chris Ralph, what's interesting about these million dollar homes is

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<v Speaker 1>that it's a It may be a big part of

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<v Speaker 1>what's in San Francisco now, but it's a very small

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<v Speaker 1>portion of California overall, or even the country overall. However,

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<v Speaker 1>I think that's one of the issues in other experts

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<v Speaker 1>we've talked to is the issue for California is so

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<v Speaker 1>many Californians are being priced out of the housing market

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<v Speaker 1>because prices have risen so much. Maybe not to a

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<v Speaker 1>million dollars, but a home that used to be to

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<v Speaker 1>fifty might be five thousand, etcetera. We got the existing

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<v Speaker 1>home sales report today in April they were up one

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<v Speaker 1>point seven about five and a half million units at

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<v Speaker 1>an annual rate. Our rising home price is going to

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<v Speaker 1>slow that down. What do you see broadly? Yeah, well,

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<v Speaker 1>we think low inventory is really you know, slowly slowing

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<v Speaker 1>me down the sales. And part of that liw inmentary

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<v Speaker 1>is because in many markets prices are growing growing out

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<v Speaker 1>of reach, especially growing out of reach of a middle

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<v Speaker 1>class buyers. So you know, for example, you know, in

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<v Speaker 1>the in the northeast New York, Boston, you know, um,

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<v Speaker 1>a middle class buyer would have to spend you know,

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<v Speaker 1>about the income on a home out here, it's as

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<v Speaker 1>high as fifty to six. So we think that that's

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<v Speaker 1>going down. But but I think the uh, you know,

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<v Speaker 1>the the other issue is, um, you know, with with

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<v Speaker 1>inventory being so low, it kind of creates a grim

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<v Speaker 1>block effect that if it's difficult for someone to move

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<v Speaker 1>into a different house because it's too expensive, they're not

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<v Speaker 1>going to sell their own house, and so it creates

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<v Speaker 1>this traffic jam so to speak, in the market where

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<v Speaker 1>it's difficult for people to trade. And the fact that

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<v Speaker 1>at this stage in the economic cycle. You know, you

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<v Speaker 1>would expect home sales to be you know, a little

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<v Speaker 1>little bit higher, probably over the you know, the six

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<v Speaker 1>million mark Ralph You're in San Francisco, so that's home

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<v Speaker 1>to Bloomberg and nine sixty am. You mentioned Boston home

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<v Speaker 1>to a m New York. You looked at the concentration

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<v Speaker 1>to five neighborhoods that witnessed a great increase tell us where. Yeah,

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<v Speaker 1>so Brooklyn is the place to be if you're looking

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<v Speaker 1>for recent million dollar homes. I was very surprised how

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<v Speaker 1>concentrated it was in the New York metropolitan area, and

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<v Speaker 1>many of the other markets we looked at neighborhoods were

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<v Speaker 1>quite spread out. As far as those that had the

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<v Speaker 1>biggest increase in million dollar homes in New York, it

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<v Speaker 1>was exclusively in Brooklyn. In fact, if we look, you know,

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<v Speaker 1>look at the top top five neighborhoods, Bedsty, Greenwood, Crown Heights,

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<v Speaker 1>green Point, Burropark All Brooklyn all increased pretty pretty quickly.

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<v Speaker 1>You know, for example, Crown Heights went from about three

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<v Speaker 1>of homes at the million dollar market tow over half today.

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<v Speaker 1>So that that is a remarkable increase in more than

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<v Speaker 1>you know, just just what general health of the economy

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<v Speaker 1>would would would suggest. But you know, for people who

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<v Speaker 1>can afford to buy a million dollars homes, if you

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<v Speaker 1>look at San Francisco, Santa Say, you've got people who

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<v Speaker 1>work in the in the tech industry, right. Uh, if

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<v Speaker 1>you can have afford to buy a million dollar plus home,

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<v Speaker 1>how much does it matter to you what the prices?

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<v Speaker 1>Does it? Even does financing? Does a mortgage rate ed

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<v Speaker 1>to you at all? Because at that level, you've got

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<v Speaker 1>a lot of means. If you can afford to buy

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<v Speaker 1>a home at that price or higher, yeah, well you're

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<v Speaker 1>you're certainly certainly right. So for most persons who have

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<v Speaker 1>a healthy salary in the tech industry, it's not really

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<v Speaker 1>that much of a problem. But you know, only seven

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<v Speaker 1>of our workforces in the tech economy, so there are

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<v Speaker 1>a lot of others that that don't work and many

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<v Speaker 1>of them and we think are being impacted by by

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<v Speaker 1>rising rising prices, And it wasn't making it difficult for

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<v Speaker 1>them to get into homes, especially first time home buyers

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<v Speaker 1>because oftentimes that that first time HomeBuyer price point means

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<v Speaker 1>that in order to save up for that down payment,

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<v Speaker 1>which could be you know, a hundred thousand dollars or so,

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<v Speaker 1>um you know, could could take ten, twelve, fifteen years, Robod,

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<v Speaker 1>if you could just tell us a little bit quickly

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<v Speaker 1>about Miami. Yeah, so, so Miami actually didn't make the

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<v Speaker 1>top ten. It was it was close. Uh, you know,

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<v Speaker 1>Miami saw many many neighborhoods um you know, increasing pretty quickly,

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<v Speaker 1>especially in the Fort Wauterdale area, navarea Isle. Uh. You know,

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<v Speaker 1>nearly all homes now are about a million dollar mark,

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<v Speaker 1>whereas four years ago only about half. But we also

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<v Speaker 1>see pretty high concentrations in the downtown Miami and just

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<v Speaker 1>outside downtown. We think some of that is actually driven

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<v Speaker 1>by recent luxury condo development, um you know, of which

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<v Speaker 1>is you know, attracting a noticeable share of actually foreign investors.

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<v Speaker 1>How don't you want to hear about Seattle? Depressed me

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<v Speaker 1>too much? Ralph McLaughlin, thank you for joining us chief

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<v Speaker 1>economist at Trullia dot com. Million dollar homes becoming a

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<v Speaker 1>lot more commonplace across the country. I'm Cathleen's along with

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<v Speaker 1>Pim Fox, thank you for joining us today. Let's thank

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<v Speaker 1>Reggie Basil, our technical director, and our producer Samara Linga.

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