In the first Austin Powers movie, the defrosted Dr. Evil unveils his plan to hold the world hostage for the sum of $1 million. An underling tactfully points out that a million bucks isn't all that much these days. A new report by Harvard University's Joint Center for Housing Studies documents one aspect of that economic reality. "A decade ago, million-dollar homes were uncommon," the report begins. "This is no longer true."
How many such homes are there? The study's author, Zhu Xiao Di, draws on a couple of sources to address the question. Looking strictly at single-family, owner-occupied homes, the latest Census data on the matter (from 2000) put the number of such domiciles at 313,759. The Harvard report suggests the figure would be more than 100,000 homes higher if luxury apartments and condos were included. Meanwhile, the Federal Reserve's Survey of Consumer Finances (SCF)pegs the number of million-dollar primary residences at about 850,000 as of 2001. The number of high-priced houses has risen steeply in recent years, due partly to lavish new construction and partly to increases in the value of existing houses. The SCF says there were a little over 300,000 million-dollar homes in 1989. The Census Bureau didn't even define such homes as a separate niche in 1990, when "$500,000 or more" was the priciest category. But it says the number of $500,000-plus homes nearly doubled (even adjusting for inflation) between 1990 and 2000, which suggests a steep rise in the number of million-dollar homes.
One remarkable trend is the proliferation of million-dollar homes that are nothing special. They just happen to be situated in very desirable locations. The report mentions one California neighborhood where $1 million gets you nothing more than "an entry-level home." In another locale in that state, it's simply the going rate for a three-bedroom, two-bathroom home. California accounts for 41 percent of million-dollar homes; New York is a distant runner-up (7 percent). But the rise of such homes is not exclusively a coastal phenomenon. The Harvard study cites a news report that Minneapolis had "300 listed for sale in August 2003 through one realtor alone."
If you're feeling sorry for the poor souls who must pay the mortgages on these places, don't bother: "Many of the buyers of 'million-dollar' houses pay cash for their homes." It doesn't hurt that their annual household income averages over $900,000, according to SCF data. A lucky thing, too, since they'll need some money to spruce things up. In a Coldwell Banker survey cited in the report, nearly half the purchasers of million-dollar homes said they plan to do renovations.