The fabled million-dollar home is hardly an endangered species but is less common than some urban dwellers might believe — except in California, that is. Only 0.6 percent of homes nationally are valued at more than $1 million, but in the Golden State more than 2 percent of homes top the mark, according to a new analysis of 2000 Census data.
With just 10 percent of the nation’s 55 million single-family homes, California accounted for 41 percent of those worth more than $1 million, according to the analysis published this week by the National Association of Home Builders. New York state was a distant No. 2 with 7 percent of the nation’s million-dollar homes.
One caveat: The Census Bureau definition of million-dollar homes included only owner-occupied, single-family dwellings, no doubt excluding thousands of New York City condos and co-op apartments valued at seven figures or more. Still, there is little doubt that California in general and northern California in particular is the leader when it comes to high-priced homes, said Gopal Ahluwalia, head of research for the builders association.
“I think there are good fundamental reasons,” he said. “The cost of land in some areas is very high.” Reiterating a common theme of the trade group, Ahluwalia said home-building is highly regulated in California, adding to the cost of homes, delaying the time it takes to bring new houses to the market and driving up the cost of existing housing.
“It’s a simple question of demand and supply,” he said.
The Census figures are based on home values offered by owner-occupants, and Ahluwalia figures many of the values could be underreported. But the results are consistent with other data that show about 0.6 percent of home sales are valued at $1 million or more, said a spokesman for the National Association of Realtors.
And despite the recent economic slowdown, sales of such luxury properties have not slowed at all so far this year, according to Coldwell Banker Real Estate, which specializes in luxury homes. The brokerage network sold a record 11,000 homes last year that were valued at more than $1 million and is on pace to top that level this year, said Alex Perriello, president and chief executive officer.
Record-low mortgage rates, of course, have helped support the housing market through the economic downturn, but figures from Coldwell Banker corroborate that the rich are indeed different — 31 percent of those luxury home purchases were made with cash. Of those who did take out a mortgage to pay for their dream home, 17 percent made a down payment of 50 percent or more.
Mortgage rates help, but demographics are the key to a market that has a sweet spot of $1.5 million to $2 million, said Perriello.
“Baby boom generation buyers are reaching their peak home buying years, and there is a tremendous transfer of wealth being made to baby boomers from their parents,” Perriello said. “I hear it time and time again — buyers in their late 40s or early 50s just inherited money from their parents and they’re looking to invest in real estate or buy a second home.”
While million-dollar homes are still selling, Perriello said the super-luxury end of the market has virtually dried up since the stock market collapsed in 2000.
At the height of the bull market, Perriello said, “We were seeing an awful lot of very, very large transactions — 25, 30, 40, $50 million. In the last couple years we haven’t seen much activity at all in that segment of the market.”
According to a Coldwell Banker profile of million-dollar home buyers, released Tuesday, 88 percent are married and 67 percent are between the ages of 35 and 55. The No. 1 profession is listed as “large-business executive.” And the top amenity demanded by these wealthy buyers was a designer kitchen, followed by a theater-style media room.
The Census Bureau identified 10 cities with a population of 100,000 or more that had the highest proportion of million-dollar homes, of which five were in northern or southern California. But the No. 1 city for $1 million homes was Cambridge, Mass., home of Harvard University and M.I.T., where nearly 12 percent of single-family homes are above the milestone level. Other cities on the list included Fort Lauderdale, Fla., Stamford, Conn., Atlanta and Honolulu.
The least likely places to find million-dollar, owner-occupied homes were Arkansas, Vermont, South Dakota and North Dakota, with just 554 such properties in the four states combined.