Price growth of high-end housing markets slows: Zillow

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With home price appreciation decelerating, the top end of the marketplace appears to be taking the biggest hit, according to Zillow.

A total of 218 cities had average home values of $1 million or more at the end of 2019. Seven new cities made the list and four fell off of it. That net gain of three is the smallest annual jump since Zillow started tracking the data in 2014; it is also the first time since 2016 with drop offs. If the current declining pace of home price growth holds into 2020, 11 cities will join the list with five more falling off of it.

Slower price appreciation, combined with low mortgage rates, in effect, drives consumer home buying sentiment higher.

"Odd though it may seem, it's the cities at the top that are 'struggling' the most during this return to normalcy in the market," Skylar Olsen, Zillow's director of economic research, said in a press release. "More than just slower growth, home values good and truly fell in many of these hubs of luxury, a sign that the excessive home value appreciation of the past several years drove prices too high — even beyond the reach of those who could afford almost anything almost anywhere else."

Unsurprisingly, most of the municipalities meeting the $1 million threshold congregate around the typically expensive housing markets. San Francisco has 46 of the 218 cities in its vicinity. New York followed closely at 43 and Los Angeles trailed at 30.

Last year's additions to the list were Santa Ynez, Calif., Telluride, Colo., Forest Hills, Tenn., Sierra Madre, Calif., McLean, Va., Moose, Wyo., and Redondo Beach, Calif. The four that lost their distinctions were San Jose, Calif., San Quentin, Calif., Lexington Hills, Calif., and Laie, Hawaii.

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Housing market Home prices Purchase Housing affordability Mortgage rates Zillow