Million-Dollar Homes Lose Luxury Status Due to ‘Shrinkflation'

Million-dollar homebuyers are getting less bang for their buck in a phenomenon known as “shrinkflation,” which occurs when the price of a good stays the same or grows even as the item gets smaller. More than twice as many $1 million-plus homes were sold this spring compared to two years ago, but as median home prices soar higher, those high-end properties are losing their luxury status, CNBC reports.

Million-dollar homes peaked at 3,021 square feet in mid-2020 and fell to 2,530 early this year before rising once again to 2,624 square feet halfway through the year, and today’s $1 million homes also have fewer bathrooms and are generally older, according to a new report from Zillow.

It’s one way inflation is hitting the housing market, according to Skylar Olsen, chief economist at Zillow.

Money will not go as far for homes at any price point, she said. But the $1 million threshold is particularly eye-catching because of the expectations buyers typically place upon it.

“A million dollars isn’t as luxurious as it once was,” Olsen said.

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