A million-dollar home looks very different from one city to the next.
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Although a million-dollar home conjures many images, a condo less than 1,200 square feet is not usually among them. Yet, that is precisely how far your hard-earned dollar will go in San Francisco, where a typical single-family home listing for $1 million will get you a three-bedroom, one-bath home covering 1,150 square feet, according to a new report by Zillow.
In nearby Oakland and San Jose, $1 million will obtain about 1,500 square feet, while a typical $1 million condo in Irvine, California is nearly 2,100 square feet, larger than $1 million detached homes in neighboring Los Angeles.
The value of any home depends greatly on location and real estate market conditions, and that’s no different for million-dollar homes. A $1 million price tag can buy a palatial dream home in some cities, while buyers in large coastal cities will get less bang for their buck.
In most large cities, 87 of the largest 100 included in the Zillow analysis, a detached single-family house is the standard for a $1 million home. All have at least three bedrooms and one-and-a-half bathrooms, and they range from around 1,400 square feet in Fremont, California to more than 7,000 square feet in El Paso, Texas.
In addition to El Paso, $1 million will buy a mansion of at least 5,000 square feet in nine other large U.S. cities. Most are in Southern states, including four in Texas, two in Tennessee and one each in North Carolina and Alabama. The smallest $1 million single-family homes are in Honolulu and California. The typical $1 million homes in Honolulu, Fremont, Oakland, San Jose and Los Angeles are less than 2,000 square feet.
“Cost of living is definitely a factor, and that plays out in the real estate market itself,” said Zillow senior economist Cheryl Young. “Where people make more money, where things cost more, you’re going to have home prices much higher. And it’s not going to buy you as much home.”
Young pointed out that owning a $1 million home was once a status symbol, but because of escalating home prices, it feels closer to the price of entry level for homeownership in some parts of the country.
“We do know that home values in general have gone up considerably in all major markets in the United States, so I would think that especially in terms of home prices, we’re starting to see more homes in the million-dollar range,” said Young.
Condos make up a much larger share of the million-dollar market in major coastal cities. Still, buyers in various cities get very different condos for their million dollars.
“Nationwide, the typical $1 million home at 2,200 square feet may not be sufficient to impress colleagues or neighbors,” said Young. “Only in the most affordable markets, such as some in the South, will you find $1 million homes that verge on palatial, and the reality for some markets – particularly those on the coast and in California – is that $1 million homes often stand out more for their diminutive size given their hefty price tags.”
Townhouses and row houses are the exceptional $1 million homes in Minneapolis, Washington, D.C., and Philadelphia, perhaps owing to regional construction practices. Boston, New Orleans and Long Beach, California have an unusually high share of duplexes, triplexes or quadplexes worth $1 million.
The proliferation of smaller $1 million homes in pricey markets points to how out of reach homeownership likely is for middle-class families or first-time buyers.
“Those hoping to own in those expensive markets are forced to move farther out from city centers or to markets where you don’t need $1 million to afford a home big enough for your needs,” said Young.
There is something to be said about Southern markets, especially Texas, where many home buyers are living large on oversized lots, especially those farther away from city centers.
“If you look at these different markets, and you go outside the main city a little bit, it gets a lot cheaper,” Young said. “So you’re also paying quite a bit more to live close to things like jobs and a lot of other amenities. It depends on how close you are to downtown and where the job centers are, and of course, how expensive the actual market is.”
Millennials make up the largest share of home buyers at 37 percent, according to a recent report by the National Association of Realtors. Commuting costs are most important to Millennials, and they have purchased their homes closest to their previous residence.
A new analysis by Coldwell Banker Global Luxury found that there are approximately 618,000 Millennial millionaires in the United States. Homeownership is high among this influential group: 92% have purchased property, with 80% purchasing a single-family dwelling.
In terms of locations, Millennials tend to prefer markets that are more affordable — often in suburbs or second-tier cities, where their dollars will carry them further. “Even if they have the money, they may still choose a non-traditional luxury neighborhood over the prestige of a traditional luxury neighborhood if it means they can walk to the corner cafe,” the Coldwell Banker report stated.
In some cities, owners of million-dollar homes often share walls with their neighbors either in multi-unit buildings or zero-lot-line styles of home.
“In New York and San Francisco, you might see condos are fairly common, especially in the city,” Young said. “And in New York, co-ops are obviously a pretty common house type, but then an 890-square-foot condo in San Francisco that may fetch a million dollars but doesn’t even have a second bedroom, that’s pretty surprising. And some of that is because a lot of the condos in San Francisco are newer so you’re going to have that new-home premium. You might have a brand-new condo with a doorman so that makes it a little more expensive for that unit.”
If you want the most possible bang for your million bucks, it typically pays to live outside of an urban core. Buyers willing to forgo the shorter commutes and plentiful amenities that often come with living in a principal city will usually be rewarded with a larger home. For example, those living in the nation’s capital can trade in their 1,650-square-foot row house in Washington, D.C., for a 4,700-square-foot home with five bedrooms by moving to neighboring Silver Spring, Maryland. However, Las Vegas residents might as well stay put. They would have to give up half a bathroom and 100 square feet in a move to nearby Henderson, Nevada.