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Coldwell Banker's annual apples-to-apples comparison of homes across the country shows a lot of variety in house prices—and in local economies
In Greenwich, Conn., Boston, and many parts of California, a four-bedroom house can easily set you back more than $1 million, while in parts of Texas and in the Midwest, a similar house can be had for just over $100,000.
But you knew that already. It's no secret that homes in ritzy Beverly Hills cost 10 times more than comparable houses in the military community of Killeen, Tex. The question is: How much do you really need to pay for the lifestyle you want? It might be less than you originally thought.
According to Coldwell Banker's 2007 Home Price Comparison Index (HPCI), Beverly Hills is the most expensive housing market in the nation for the second year in a row, with the average price of a home sold through July, 2007, at $2.21 million. In Killeen—the most affordable market in the U.S., according to the HPCI study—a similar home sells for $136,725.
Killeen is a city of about 100,000 located directly next to the Fort Hood army base, with a military-dependent economy. You won't find anything akin to Rodeo Drive here—but you will find community events such as fairs, concerts, and high school football games; outdoor recreation like fishing and hunting; and a pervasive sense of patriotism.
A Different Sensibility
"When you drive through town, all the local establishments have got the stickers saying 'we support our troops' in the window," says Tom DeAngio, a Realtor and Killeen resident whose son will soon be deployed for his second tour of duty in Iraq. For nightlife, DeAngio says Henderson's Family Restaurant on East Avenue A is a popular choice.
The Coldwell Banker HPCI survey evaluates average selling prices in 317 U.S. markets for single-family houses of approximately 2,220 square feet with four bedrooms, two-and-a-half baths, a family room, and a two-car garage. The cumulative average sales price of these subject homes is $422,343 (higher than the National Association of Realtors' median home price of $218,200 for all existing homes sold in the U.S.).
Beverly Hills; Greenwich, Conn.; the California markets of La Jolla, Santa Monica, Palo Alto, Newport Beach, Santa Barbara, San Mateo, and San Francisco; and Boston comprise the top 10 most expensive markets in the country, all with average home prices of $1.38 million and up. In addition to Killeen, Minot, N.D.; Arlington and Fort Worth, Tex.; Canton, Ohio; Muncie, Ind.; Topeka and Wichita, Kan.; Tulsa, Okla.; and Grayling, Mich., make up the list of the most affordable housing markets.
But affordable markets exist in just about every state—even in California. The average 2007 sales price in Sacramento for one of Coldwell Banker's subject homes was just $380,625, making it the most affordable market in the state. In Connecticut, a home in West Hartford sells for an average of $365,000, and in Worcester, Mass., you can buy a four-bedroom home for around $286,000.
California, Connecticut, and Massachusetts have the widest price variance between high- and low-end housing markets, with an over $1 million difference between the average home price in their most expensive and most affordable markets. But some states are affordable no matter where you look. In Idaho, the difference in sales price between the most expensive (Boise) and most affordable (Coeur d'Alene) markets was a mere $30.
Real Estate's a Local Business
Thinking about relocating? An area's affordability is important to consider when buying a home. Unaffordable areas may indicate that prices are too high to be supported by the local economy, while affordable prices ensure that demand will continue to fuel the housing market. Affordable areas can be good hunting ground for real estate deals (BusinessWeek, 7/18/07).
"The real estate market has certainly changed over the last year," says Jim Gillespie, chief executive officer of Coldwell Banker. "I continue to point out that we cannot make national blanket statements about appreciation and inventory. Real estate is a local business, with each market having its own story to tell."
See BusinessWeek's slide show for a look at the most affordable and most expensive housing markets by state.