The past decade has seen a significant change in the notion of what constitutes luxurious real estate. The once-standard price of $1 million no longer sets the bar, shifting upwards for the first time.
As of 2025, potential buyers looking for entry-level luxury homes should expect to part with at least $1.3 million just to enter the market.
This figure represents the lower end of the top 10% of premium homes in the country, according to a recent analysis from Realtor.com®. For context, that’s nearly three times the national median price of roughly $430,000.
For buyers targeting the top 5% of the market, preparing to spend at least $2 million in 2025 is essential.
In the ultraluxury segment, which accounts for the top 1%, entry-level prices hover around $5.5 million, a staggering 12.6 times greater than the average list price.
Many buyers are finding themselves startled by how quickly real estate prices have surged amid growing demand and inflation. A representative from Greenwich Street Team of Compass mentions that numerous buyers are reassessing their budgets and looking at areas where prices remain relatively low.
What’s Fueling the Luxury Price Surge?
But what’s really behind the skyrocketing prices of luxury homes? Senior economist Anthony Smith at Realtor.com points to the COVID-19 pandemic as a critical juncture that turbocharged the housing market.
“Prior to the surge in demand and low mortgage rates during the pandemic, homes priced at $1 million were in the top 10% nationwide,” he explains. “Back in 2016, a $1 million home was barely outside the top 5%.” That’s a significant shift.
As mortgage interest rates fell during the pandemic, the starting price for a luxury home skyrocketed from approximately $796,922 in July 2016 to $1.3 million by July 2025.
Simply put, a home that once cost $1 million now hovers close to $1.6 million for a similar luxury classification. It’s critical to understand that “luxury” isn’t a one-size-fits-all term; it varies widely across different markets.
For instance, in Detroit, $1 million can buy the grand 32,529-square-foot Bishop Mansion featuring 12 bedrooms and 8.5 bathrooms. Conversely, in San Jose, California, known for its steep housing costs, $1 million might only secure a modest 1,200-square-foot bungalow.
Nationally, homes priced over $1 million now make up over 13% of all home sales, especially in metropolitan areas known for luxury living.
“Luxury is becoming more distinct from the broader housing market as the affluent continue to thrive while the middle class grapples with affordability,” explains Ana Bozovich, a Miami-based real estate agent. “The widening wealth gap has definitely empowered buyers at the upper end of the market.” Even as borrowing costs rise, this wealthier demographic often remains insulated, engaging primarily in cash transactions.
The Old Money Wealth Center
New York City stands as a prime example. The metropolitan area accounts for a significant part of the luxury market, with approximately 12,000 $1 million listings, representing a third of the Big Apple’s active inventory. With a median price soaring to $2.88 million, the landscape is starkly different from previous years.
Just an hour from Manhattan, Greenwich, Connecticut, has become synonymous with East Coast luxury. Since 2019, median sales prices have increased by 74%, reaching $3.25 million.
This year, only 10 out of 362 sales have been under the $1 million mark. “Stock market performances have given high-end buyers a confidence boost,” says Pruner. Many now view real estate as a more stable investment.
In observing Greenwich’s luxury real estate market, Pruner identifies three main forces driving the prices of top-tier homes.
“There should be around 550 listings in the fall, but we’re down to just 124,” he notes. With low inventory being a consistent theme, those benefiting from stock market gains are pushing property demand even higher.
Miami’s Booming Luxury Market
Another hot spot is Miami, which boasts over 10,000 listings above $1 million, making it one of the top cities in the luxury market. There, the entry point for the top 10% of homes starts at nearly $2.1 million.
According to Bozovich, the initial entry price for Miami’s top detached homes was just $722,000 in 2015, skyrocketing by 177% in the last decade. In terms of sales volume, luxury homes priced over $1 million represented 24% of all transactions in the first half of 2025, compared to only 7% a decade prior.
“Ten years ago, $1 million would have secured a waterfront property over 2,700 square feet in Miami Shores,” she mentions. “Now, that same amount buys a much smaller dry lot house without water access in North Bay Village.” The landscape of luxury has changed dramatically.
Miami’s constrained land supply significantly contributes to rising prices, especially in the coastal areas. “You can’t create more land, particularly with sought-after waterfront properties,” says Bozovich. The city’s tax-friendly environment and growing reputation as a destination for wealth migration further fuel this trend.
What Are High-End Buyers Seeking?
For today’s affluent homebuyers, priorities vary between regions and personal tastes. Pruner notes that in Greenwich, 2025 buyers are keen on well-built properties with high-end finishes, favoring open and welcoming designs that feel less like a “McMansion” and more like a family home.
In Miami, Bozovich echoes the sentiment that waterfront views remain essential, but there’s also rising interest in branded residences and wellness-focused designs that blend indoor and outdoor living. “Today’s buyers want homes that prioritize both comfort and safety,” she adds.
