How much home can $1 million actually buy?
A real estate riddle for our times: What do a 5,500-square-foot, five-bedroom McMansion in Las Vegas and a cramped one-bedroom condo on E. 29th Street in Manhattan have in common?
The answer: Both sport a $1 million sales tag.
The dichotomy showcases how much – or how little – bang for the housing buck home buyers get in different parts of the country amid the economic turmoil.
A thriving stock market, historically low mortgage rates and easy lending standards led to frenzied home-buying activity, especially among speculative investors.
This buying spree pushed prices up to the point where even modest homes in some markets have topped the million-dollar mark.
But as the economy soured and the credit crunch took hold, certain markets that saw a huge run-up in prices between 2003 and 2006 suddenly hit a wall. The biggest corrections came in California, Florida, Nevada, Arizona and Ohio. And buyers can still find bargains in areas hit by local economic troubles, such as Michigan, with its auto industry woes.
In Detroit, $1 million will fetch a 9,500-square-foot, six-bedroom, 8.5-bathroom home on Lincoln Road.
In Texas, $1 million will buy you a 4,903-square-foot, four-bedroom, 3.5-bathroom home on Indian Creek Drive in Fort Worth, complete with a steam sauna, heated pool, cabana, spa, multiple fireplaces and gaming room.
Then there’s a 6,363-square foot spread on Hillcrest Road in Dallas with floor-to-ceiling windows, marble floors, two curved staircases, multiple fireplaces, three-car garage and pool.
But in Manhattan and parts of California, it’s a different story. A million dollars will set you up in an 625-square-foot – there’s no zero missing – one-bedroom, one-bathroom condominium with partial city views on Chambers Street in Manhattan, or a 1,026-square-foot, two-bedroom, two-bathroom condo in a nondescript building with no views on Montgomery Street in San Francisco.
In the overall U.S. market, home prices fell 35% on average in March, with the biggest declines occurring in Nevada, California, Michigan and Idaho. If you ever thought about having a second home in Florida, Nevada or Arizona, now would be a good time.
The individual markets taking the biggest pricing hits over the past year have been Sacramento, Calif., and Lansing, Mich., where home prices tumbled 15% to 20% on average. Home prices in Detroit, Long Beach, Calif., Fort Myers and Tampa, Fla., and Las Vegas slid 10% to 15% on average. In Las Vegas, a non-custom-built home that sold for $350,000 a few years ago escalated to as much as $900,000 at the market’s peak.
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