Wealthy young urbanites are in a race to the U.S. suburbs. But they’re already late: The starter mansions are almost gone.
Take Wellesley, a leafy Massachusetts town of 30,000 people getting an influx of buyers from Boston who have outgrown apartments. Couples with dual incomes are coming out of the pandemic with more money, hungry for kids’ rooms and “his” and “her” home offices.
In the first week of February, there were just eight homes available for sale, a fifth of the level two years earlier. The cheapest one: $1.1 million.
“You have to act fast,” said Lara O’Rourke, a local Sotheby’s agent who helped a buyer beat out 15 others for a house listed for $1.4 million last month. “Inventory is not hanging around.”
Across the country, the upscale homes that were once a symbol of affluence and aspiration for well-to-do suburbanites are in short supply. Buyers are rushing to lock in purchases as mortgage rates rise, intensifying demand. That’s driving up prices from elite commuter towns such as Wellesley and Newton outside of Boston and Rye north of Manhattan, to booming Sun Belt areas like Austin, Texas.
In a heated U.S. housing market that has locked out many entry-level buyers, people with million-dollar budgets are better positioned than most. But their difficulty finding homes has a spillover effect: They push into surrounding towns, and cheaper segments, squeezing affordability more with each bid.
“The entry price for these towns has already gone sky high,” said Chris Herbert, managing director for Harvard University’s Joint Center for Housing Studies. “It ends up pushing prices up across the board.”
The number of U.S. cities where million-dollar homes are the norm jumped by the most ever last year, a Zillow Group Inc. report showed last week. Luxury listings — the top 5% of the market — are the tightest relative to demand since at least 2012, when brokerage Redfin Corp. started tracking the data. As of the fourth quarter it would take 1.9 months to sell all of the U.S. luxury single-homes for sale, compared with 3.3 months at the end of 2019.
Outside Boston, high-end inventory plunged almost 40% from a year earlier in the fourth quarter. That compares with a 14% drop in supply for the rest of the market.
Inventory in Greenwich, Connecticut, a suburb favored by Wall Street financiers, is at the lowest level in at least six years. Before the pandemic, the sprawling architecture and physical distance from neighbors, bars and restaurants seemed out of step with city-obsessed millennials. That’s changed.