These 4 States Have the Most Mortgage Balances Over $1 Million — What Does That Mean for Their Housing Markets?

Average mortgage balances are now more than 7% in U.S. markets, where loan amounts exceeding $1 million are typical, according to Experian research . Given that the trend has been down for a couple of years, this suggests prices are pretty accessible in some areas. Still, it begs the question of whether this is sustainable for the price point, the area around it, and the environment in which it exists.

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Here are four states with the greatest number of houses with mortgage balances of one million dollars. How will this affect their housing market? Let’s find out.

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1. California

California is once again among the top states in America for million-dollar homes , with mortgage balances of more than $1 million. The top cities with the highest averages are Atherton ($2,447,013), Hidden Hills ($2,082,074) and Montecito ($1,975,661). The state has 26 cities on Experian’s list, most of which are territories of the ultra-luxury properties market.

Given that home prices keep rising, more consumers are being pushed to take jumbo loans . These loans often have strict credit policies and charge high interest rates. While the $1 million dollar mortgage is normal in California, it’s a clear indication of the state’s housing affordability.

High balances represent the general increase in house prices, making it difficult for new homeowners to afford these houses.

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2. New York

New York is second on Experian’s list, with seven cities having an average of over $1 million in mortgage balances. Sagaponack takes the top spot at $1,888,234 for an average mortgage, with Sands Point ($1,747,575) and Water Mill ($1,086,385) coming in second and third.

The Hamptons are the main reason why rich forks just keep pushing up the mortgage balances. New York alone has contributed great deals to the list, particularly from the popular vacation area known as the Hamptons, which is famed for luxury real estate.

New York has seen a slowdown in the rate of home sales over the past years after COVID-19; however, the luxury segment is still active. Markets like the Hampton’s, for instance, remain popular among the wealthy, encouraging mortgage balances.

While the number of homeowners holding million-dollar mortgages remains low, it is possible that the state’s housing market can deteriorate. The price spike can make housing markets unaffordable for middle-class families in the most popular regions.

3. Florida

The emergence of $1 million mortgage balances has also been prevalent among Florida cities. In Bal Harbour, the top city on the list, borrowers have faced an average mortgage of $2,589,207 — more than any other city in the country.

The growth in the number of mortgages in millions of dollars recorded in Florida can be attributed to greater earning capacity . As markets and the luxury housing market retain their strength, problems may arise with the economic housing market where affordability becomes an issue.

4. Washington

Even though Washington State is not among the most luxurious, over the years, it has seen a surge in its mortgage balances. Clyde Hill neighborhood has the highest mortgage with an average mortgage balance of $1,783,075, and Yarrow Point $1,385,403, is among the top around the Pacific Northwest regions of the United States.

Seattle has also seen its own share in the rice of property value, mainly contributed by the increase in tech and limited housing.

An increase in million-dollar mortgages reflects a demand for high-end housing and is especially evident in affluent suburbs. However, it also raises questions regarding maintaining these costs in the future, considering that more and more populations can barely afford to meet the basic requirements.

This article originally appeared on GOBankingRates.com : These 4 States Have the Most Mortgage Balances Over $1 Million — What Does That Mean for Their Housing Markets?