Ah, to be a millionaire. It’s been almost every kid’s dream – how many little boys (and maybe even little girls!) haven’t fantasized about being not just Batman, but his alter ego, Bruce Wayne, the filthy rich bachelor who could so easily afford all those cool “bat toys”? Fantasies of being a movie star meant not only being famous, but being rich as well.
Even television programming acknowledges most people’s dreams of being rich, as a recent game show gave itself the title, “Who Wants to be a Millionaire?”
For decades, it was thought that being a millionaire meant the end of all troubles – you could go where you want, do what you want, buy what you want. But is that really the case anymore? With rising salaries and inflation, will a million dollars really get you anything and everything you want?
Obviously the answer is no, and nowhere is this more demonstrated than the U.S. real estate market. A million-dollar home was once an opulent mansion, or a spacious apartment with a spectacular view of a city below. At the very least, a million dollars would buy you a parcel of land that you could build that dream home on.
Today, that’s obviously not quite the case. In many areas of the country, a million dollars won’t buy you much of anything. A million dollars will get you a modest two-bedroom condo in Manhattan, without a lot of charm or added amenities. In many places in California, a million will buy a simple 2,000 square foot home that’s also very modest in amenities and updates. The same goes for areas such as Aspen, Colorado, The Hamptons on Long Island, and of course many beachfront cities in Florida. A million dollars is considered a median or even fairly modest price for a residence.
In some areas, such as in Connecticut and other New England states, homes valued at a million dollars are actually being demolished or razed to make way for new construction, since that million dollar price tag just isn’t as remarkable as it once was.
But to many people, a million dollars is still a lot of money, especially when you’re financing a home for that much. From 1999 to 2004, U.S. home prices increased by a whopping 48%, according to the U.S. Office of Federal Housing Enterprise Oversight. In states such as California (up nearly 100%), New York (an increase of about 68%) and even Maine (63%), costs have risen even more dramatically. Buyers wonder just what that price tag includes.
So really, what will a million dollars buy you when it comes to a private residence in the U.S.?
Location is still the key.
In real estate, the old adage, “Location, location, location” still has not changed. Prices of homes always seem to follow businesses and industries, as demand for homes of course spike up the price of existing structures and surrounding land on which to build. And when you’re dealing with a small bit of land that must accommodate a large populace, such as on the island of Manhattan, then of course the huge demand sharply increases the price.
The median sales price of a two bedroom coop in Manhattan hit $1,272,000 in 2006, triple what it cost in 1997, according to data from Prudential Realty. “In the past, the million dollar home was the last one you bought in Manhattan, you raised your family in it,” says Palumbo Taubner of Prudential. “Now it’s a stepping stone.”
Other real estate agents and brokers agree. “A million dollars, these days that’s a two-bedroom,” says Richard Hamilton, a real estate agent at Halstead. “There are one-bedrooms going for that much. And the days of studios under $400,000 are rapidly disappearing.”
Million dollar homes account for about 2% of the residential realty market, and the biggest concentration of them is not in New York, but the other side of the country – California. In this state, over 4% of homes – that’s 1 out of ever 25 – is valued at over $1 million. San Jose tops the list with a median home price in 2006 at over $760,000. San Francisco, Santa Ana and Anaheim were all very close behind, with median home prices in the $750,000 range.
Obviously beachfront and vacation property areas will always be more expensive than the average home, as these are favorite hotspots for celebrities, politicians, captains of industry, and the like. Aspen, Colorado, and Palm Beach, Florida, will probably always see property values well into the millions because of the property and surrounding area itself.
Amenities also figure in.
But it’s not just location that affects the price of homes, and especially of new homes. Buyers are spending more time at home and want all the amenities and luxuries that they can afford.
Luxury homebuilder Toll Brothers recorded 1,094 contracts for million-dollar homes in 2006, which was 18% of the total. In 2001, that category was at 152 homes, or 4%. So the price may be higher, but the product is better.
Speaking of Toll Brothers, their homes are not only luxurious on the inside – most include marble floors, great rooms, sunrooms, on-site fitness centers for apartments, and too many amenities to list here – they also offer a “community,” meaning most are built around a golf course, or in certain desirable neighborhoods, such as Long Island. Memberships into these clubs or social communities is typically included with the purchase price of a home – not a standard feature with a home that’s priced much less.
Many million-dollar homes also come standard with security features such as touch-screen controls and built-in alarms and monitoring systems, entertainment rooms and hardwired audio systems, and their own internet and broadband access built into its construction.
Obviously the list of amenities that are available for those willing to spend over a million dollars is endless. But the bottom line is that while a million may not get you what it once did, most buyers find that they can purchase whatever it is they dream of for their luxury home – if they’re willing to pay for it.