The words million-dollar home used to evoke thoughts of grand estates in the country or
oceanfront homes with breathtaking whitewater views or a glamorous penthouse in a downtown high-rise. In some cases, a million still may buy you that – somewhere, at least.
But of course, the three rules in real estate still are location, location and location. What you get for $1 million today in Northern California varies dramatically depending on where you’re looking to buy.
To see what buyers could get for their million dollars we decided to take a look at communities from the Monterey coast to Lake Tahoe, from Silicon Valley to Sacramento, and many locations in between. What we found made interesting and fun reading.
In the state capital, for example, buyers could purchase a spectacular lakefront custom home, approximately 4,700 square feet, only 10 minutes from downtown Sacramento for $989,000. This beautiful property features four bedrooms and four baths, a gourmet kitchen, grand staircase, and a huge master bedroom suite with separate sitting room and fireplace.
If you want to trade that lakefront property for one near the ocean, be prepared to pay up. For $1 million you can snag a cute two-bedroom condo approximately 1,500 square feet in posh Carmel by the Sea. A few blocks off fashionable Ocean Avenue, this unit is about a mile or so from the Pacific Ocean.
The reason for the disparity, of course, is that property values are considerably more affordable in Sacramento than in Carmel. According to DataQuick, the real estate information company, the median sale price for a Sacramento home in May was $129,000 compared to Carmel and nearby Pebble Beach, which boast a median price of more than $1.2 million. Put another way, you could buy nearly 10 median-priced properties in Sacramento – or a good-size residential block – for the cost of one median-priced home in Pebble Beach.
The Monterey Peninsula doesn’t have a lock on valuable real estate. In fact, several communities in Silicon Valley and its surrounding suburbs topped that list, including Atherton with a median sale price of $3.5 million. Unfortunately, it is currently not possible to compare what $1 million would buy in Atherton because there are no properties listed for sale at that low of a price. The least expensive listing in Atherton: $1.35 million for a 1920s cottage.Elsewhere in Northern California, here’s what you can buy with $1 million based on current active listings in July:
- Oakland – a four-bedroom, three-bath single-family home in the Oakland hills measuring approximately 3,100 square feet. This home includes 18-foot vaulted ceilings, a three-car garage and some views of the bay.
- Pleasanton – a four-bedroom, two and a half bath approximately 2,700-square-foot contemporary home with views of Mount Diablo. Large backyard includes pool and spa with waterfall, and built in barbecue.
- Tiburon – A one-bedroom, two bath approximately 950-square foot waterfront cottage. While the home is small in size it has sweeping views and is close to the ferry, the yacht club and Tiburon restaurants and shops.
- Santa Rosa – a four-bedroom, four-bath custom home overlooking the Riebli Valley. This approximately 5,800-square-foot property features a high-end kitchen with Viking and Bosch appliances, a bedroom suite with fireplace, plus a media/theater room.
- Palo Alto – a two-bedroom, one-bath approximately 1,150-square-foot cottage near the downtown area. This cute property actually is on leased land with 54 years left on the lease.
- San Francisco – a uniquely rebuilt approximately 900 square-foot, one bedroom, two level compact single family house could be a perfect pied-a-terre in the City. It’s located near the Bay Club, Jackson Square, the waterfront and Ferry Building.
- Davis – a four-bedroom, three-bath approximately 2,800-square-foot newly updated custom home with his and her walk-in closets, a gated pool, and a chef’s designer kitchen complete with Wolf ovens, six gas burners, and two Miele dishwashers.
- Roseville – a five-bedroom, four-bath approximately 5,100-square-foot home in a gated community. Built in 2001, this expansive home features a solar-heated pool, a three-car garage and five fireplaces.
- Truckee – a four-bedroom, three-bath approximately 3,200-square-foot mountain home situated a block from the golf course and a short drive to downtown Truckee and numerous ski resorts.
While it’s uncertain exactly what you can buy with $1 million today, one thing is clear: This may be a great time to take advantage of low mortgage rates and lower home prices to buy a home anywhere.In fact, for the first time in a long, long time, it’s actually cheaper to own a home than to rent the same home. That’s one of the findings of a new report by the Joint Center for Housing Studies at Harvard.
Due to historically low mortgage rates and lower home prices post-recession, affordability levels for purchasing a home are as high as they’ve been over the past two decades. Conversely, the cost of renting is soaring in many regions, including right here in the Northern California.
San Francisco and Oakland had the biggest jumps in rent in the United States over the last year, with increases of 14.7 percent and 11.2 percent, respectively, according to Trulia, the online real estate site. Sacramento also saw a 4 percent increase and 24 of the 25 largest metropolitan areas had experienced year over year rent hikes.“With rents up, home prices sharply down, and mortgage interest rates at record lows, mortgage costs relative to monthly rents haven’t been this favorable since the early 1970s,” said Eric S. Belsky, managing director for the Joint Center for Housing Studies at Harvard.
In its report, Harvard noted that the mortgage payment for the median priced home in the U.S. (when calculated in 2011 dollars) is roughly half as much as it was in 1990! Nationwide, the payment-to-rent ratio was as high as 1.45 in 1990. (A one to one ratio means the cost would have been the same to rent vs. to buy). That translates into a 45% premium in renting vs. buying in 1990. Today? The study says the ratio has tumbled to 0.77, making mortgage payments 23% less than rent payments for the median priced home.
Many potential buyers have gotten the message and they are the reason that home sales in some parts of Northern California have rebounded nicely in the past year or two. The Harvard study says that others who have been sitting on the fence could join them soon as rental costs continue to rise, especially relative to homeownership costs.“Many would-be buyers have stayed on the sidelines waiting for the job outlook to improve and house prices to stop falling,” Belsky said. “But as markets tighten, these fence-sitters may begin to take advantage of today’s lower home prices and unusually low mortgage rates.”So if you’ve been putting off buying a home, there may not be a better time than now to jump into the market. Coldwell Banker Residential Brokerage professionals are ready to help. Just give me a call today and we’ll work together to find the home of your dreams.
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As you might guess, this document is a compilation of information from our own efforts as REALTORS, as well as input from other REALTORS in our Coldwell Banker office. I hope it has been of value to you. Don’t hesitate to email us with any suggestions that will make this document better for you and your fellow homeowners!
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