According to Coldwell Banker Real Estate, there are at least ten U.S. cities where the average listing price for a home in the first six months of this year exceeded $1.2 million. The majority of these are located on or near the California Coast. For example, San Jose suburb Los Altos, homes sold in the first half of the year averaged a $1.7 million price tag. Based on data provided by Coldwell Banker, 24/7 Wall St. reviewed the most expensive cities for buying a home.
In an interview with 24/7 Wall St., Coldwell Banker COO and President Budge Huskey explained that for the first time in years, residents of the country’s most expensive housing markets are largely professionals working in or very near their home. In prior years, he explained, many of the most expensive communities were simply very desirable for wealthy families or individuals, without necessarily being employment centers. Many of these people were retired or worked from home.
“Now,” Huskey said, “the emphasis is on those markets that are in proximity to true, strong business centers, where employment has been consistent, and the overall level of wealth and wages has been high relative to other opportunities within the country.”
These expensive markets are concentrated around the tech industry, which has remained strong throughout the recession. As a result, many of these cities and suburbs are near the heart of California’s Silicon Valley. Six are located in either the San Francisco or San Jose metropolitan area. These are areas driven by the tech boom, explained Huskey. “In an area like Los Altos, for example, you’re looking at a location that is 15 minutes away from the headquarters of such corporate giants as Google and Facebook.”
Income in the expensive housing markets is among the highest in the country. According to U.S. Census Bureau data, median household income in these cities far exceeds the U.S. median income by at least $20,000. In Saratoga, California, one of the cities on our list, median income is nearly triple the U.S. figure of $51,914.
The two cities not in California on this list are Kailua, Hawaii, and Rye, New York. In the case of Rye, the city is located within the expensive Westchester County, within commuting distance from New York City. According to Huskey, desirable communities with access to New York City have remained stable and high-priced.
In Kailua, located on the island of Oahu — the same island as Honolulu — high prices are reflective of most of the real estate market in Hawaii. The state has limited available property, explained Huskey, which drives up prices. “While there’s only one particular market in Hawaii that reached the top ten, Hawaii proved the most expensive on an aggregate measure.”
Based on data published by Coldwell Banker in its annual Home Listing Report, 24/7 Wall St. identified the country’s most expensive cities for buying a home. Homes in these cities had the highest average listing price between January and June of this year. Markets with less than ten four-bedroom, two-bath homes were excluded from the survey. We also examined data on vacancy rates, median price per square foot, and changes in price from real estate listing service Trulia. Information on income, educational attainment, and poverty rate, among other data, is from the U.S. Census Bureau.
These are the 10 most expensive cities to buy a home.
10. San Carlos, Calif.
> Avg. listing price: $1,230,880
> Median household income: $110,929
> Pct. households $200,000+ income: 30.3%
As of 2010, the median income of households in San Carlos was more than double the U.S. median of $51,914. Over 30% of households in San Carlos earned more than $200,000 per year, more than five times the national rate of 5.4%. San Carlos is one of the most expensive housing markets in the San Francisco metropolitan area. Over a twelve month period, ending in October, it had the nation’s highest median home price per square foot at $473 among all homes listed, according to Trulia. In San Francisco, the median age of home inventory was just 45 days as of the third quarter of 2012, according to Realtor.com, lower than in all but seven markets.
9. Carmel-by-the-Sea, Calif.
> Avg. listing price: $1,232,167
> Median household income: $74,489
> Pct. households $200,000+ income: 18.7%
Carmel-by-the-Sea, a small coastal city in California, is well-known for its former mayor, actor Clint Eastwood. Currently, the average four-bedroom, two-bathroom home in the city lists for more than four times the nationwide average listing price of $292,152. With nearly 19% of households earning more than $200,000 in 2010, many families and individuals in the small town can afford expensive properties. One house, despite being not much larger than 2,000 square feet, is currently listed for nearly $4.5 million.
8. Kailua, Hawaii
> Avg. listing price: $1,238,208
> Median household income: $91,082
> Pct. households $200,000+ income: 14.7%
Kailua is one of just two cities on this list not located in California. The O’ahu Island city is 12 miles northeast of Honolulu, which had a vacancy rate of 2.7% — better than most areas but considerably worse than the other areas on the list. As of October, the median price per square foot for a home in the Honolulu area was $398, more than in any other metro except for San Francisco. According to Trulia, a 0.75 acres plot of land, which includes 128 feet of beachfront, is currently for sale for $16 million in Kailua.
7. Rye, NY
> Avg. listing price: $1,312,250
> Median household income: $146,069
> Pct. households $200,000+ income: 53.0%
The average listing price for a four-bedroom home in Rye is more than $1,300,000, or more-than $1 million above the U.S. average. Employees in the often high-paying finance and insurance industries accounted for a 27.8% of employed population in Rye in 2010, well above the 7% average rate nationwide. As of 2010, 53% of households earned more than $200,000 annually, more than any other expensive city, and nearly 10 times the national rate of 5.4%. Additionally, just 1.3% of households lived below the poverty line versus 13.8% nationwide. Among the properties available for sale are a five-bedroom, 7,446 square feet waterfront home for $12.9 million and a 34.2 acre plot of land for $19 million.
6. Los Gatos, Calif.
> Avg. listing price: $1,444,214
> Median household income: $120,971
> Pct. households $200,000+ income: 37.5%
Los Gatos is one of several cities near San Jose on this list. Like these cities, Los Gatos likely benefits from the overall boom in the San Jose real estate market, which currently has the lowest vacancy rate of all metro areas surveyed by Trulia at just 1%. Currently, a number of unique properties are available in the city, including an 11,000 square feet property with an eight stall horse barn and a garage that fits 12 cars listed at slightly under $13 million. Also for sale is the former home of Apple Inc.’s co-founder Steve Wozniack. It is currently listed for $4.5 million.
5. Palo Alto, Calif.
> Avg. listing price: $1,495,364
> Median household income: $120,670
> Pct. households $200,000+ income: 39.3%
In Palo Alto, 48.7% of adults have a graduate or professional degree — well more than four times the national rate of 10.3%. The city’s proximity to Stanford University, one of the top universities in the nation, may be partly the reason behind the city’s highly educated population. Among the companies headquartered in the city are Hewlett-Packard and Tesla Motors. The city is a large employer of highly skilled employees, as 25.3% of its workers are employed in professional, scientific and management occupations, well above the 10.4% of workers nationwide. Perhaps the most famous resident of Palo Alto is Facebook founder Mark Zuckerberg, who bought a $7 million home there last year.
4. Menlo Park, Calif.
> Avg. listing price: $1,506,909
> Median household income: $107,860
> Pct. households $200,000+ income: 34.9%
Menlo Park is one of just four cities where the average listing price for a four-bedroom home exceeds $1.5 million. As of 2010, the median income in the city was slightly below $108,000. However, the recent Facebook IPO has been a windfall to the area. In June, real estate listing service Zillow reported that the “proportion of million-dollar listings” in Menlo Park — where Facebook is headquartered — rose by 87% between the company’s IPO filing and its first day as a public company. Among the houses available in Menlo Park are a five-bedroom home with a gym, theater area and wine cellar, which is listed for $4.6 million, and a six-bedroom 5,200 square feet home that’s listed for slightly under $5 million.
3. Saratoga, Calif.
> Avg. listing price: $1,582,434
> Median household income: $145,023
> Pct. households $200,000+ income: 43.1%
Though home prices in the nearby San Jose metro area fell by 25.1% peak-to-trough, Saratoga is yet another example of how the Silicon Valley housing market has recovered. Currently, the median price per square foot for homes in San Jose is $337, according to Trulia, more than all housing markets except San Francisco and Honolulu. Prices for many homes in the area have skyrocketed, according to listings on Zillow. A home currently listed for nearly $10 million last sold for just over $2.1 million in 2000, while a home listed for $14.9 million last sold in 1994 for just over $1 million. As of 2010, 43.1% of Saratoga households earned more than $200,000 per year, while 40.9% of adult residents had a graduate degree, versus 10.3% nationwide.
2. Newport Beach, Calif.
> Avg. listing price: $1,658,000
> Median household income: $107,007
> Pct. households $200,000+ income: 37.6%
Outside of Northern California, Newport Beach is the most expensive city to buy a home. Home prices are so high in the city that in 2009 legendary bond investor Bill Gross bought a nine-bedroom, 11,000 square feet home for $23 million — and then tore it down. In 2011, Gross listed the empty plot of land for $26.5 million. Orange County as a whole has a vacancy rate of just 1.5%, among the ten lowest in the nation. Despite a 32.7% drop in home prices from peak to trough during the recession, Orange County’s median price per square foot is $265. This trails only the Honolulu, New York, San Francisco and San Jose metro areas.
1. Los Altos, Calif.
> Avg. listing price: $1,706,688
> Median household income: $149,964
> Pct. households $200,000+ income: 43.6%
In Los Altos, the average four-bedroom, two-bathroom home lists for nearly $50,000 more than any other city in the nation. According to Coldwell Banker, for that price a buyer could purchase 28 similar homes in Redford, Mich., the nation’s cheapest housing market. In Redford, the average home lists for just $60,490. Currently, asking prices in the San Jose metro area have risen 12.7% year-over-year, according to Trulia. This is more than nearly every other metro area in the country.
-Alexander E. M. Hess and Michael B. Sauter