There is probably nothing that drives the average homeowner crazier than thinking that he could have bought his house for less. How many times do we find ourselves resenting neighbors who had the good luck to move into their home when the market was at a low, or kicking ourselves for not having bought sooner? And even if the guy down the block moved in after you and paid even more than you did, that doesn't help as much as it should.
The pain is mitigated somewhat if you know that someone bought a house the same size as yours for less in a different city—let alone another state. The homeowner in Katonah, N.Y., for example, who paid around $1 million for his home, understands that his abode will cost more than a similar house in Binghamton, N.Y., which might fetch $171,000. After all, Katonah is in tony Westchester County, one of the wealthiest regions in the country and a popular "bedroom community" for executives commuting to Manhattan. Binghamton, the seat of Broome County, is best known as the home of the Binghamton campus of the State University of New York, and is known as the "Carousel Capital of the World." But the more than $700,000 variance in sales price is enough to tempt nearly anyone to wonder what it would be like to live somewhere else for less.
These kinds of comparisons are almost impossible not to make when looking over the annual Home Price Comparison Index (HPCI) from Coldwell Banker. As it has done for almost 20 years, the 2006 index reveals the most affordable—as well as the most expensive—housing markets in all 50 states and the District of Columbia.
"Practical and fun"
By comparing the most affordable markets with the most expensive, prospective home buyers can get a better sense of how far their dollar can go. As Jim Gillespie, Coldwell Banker's president and chief executive officer, says, "there is a practical and a fun side to the HPCI. It's practical because it gives people an idea of what the value of their current home would be if they sold it and relocated to a different part of the country, accepted a job, retired, or were looking for a second home. The fun part is that people just love to go to our site, plug in their current homes, and fantasize about where else they could live."
The cumulative average sales price of the 317 U.S. markets surveyed is $423,950. Gillespie points out that 47% of the homes are under $300,000. As in past years, the North Dakota town of Minot is the most affordable market, with an average home sale price of $132,300. The most expensive is Beverly Hills, Calif., where the average price is $1.8 million.
Middle-management havens
The study evaluated 384 housing markets from July, 2005, to July, 2006, across the U.S., Canada, Puerto Rico, and various major international markets such as Amsterdam, Shanghai, and Dubai. According to Coldwell Banker, in order to create an "apples to apples" average the criteria for the HPCI is a "single-family dwelling, 2,200 square feet (approximately), four bedrooms, two and one-half baths, family room (or equivalent), and two-car garage in neighborhoods/zip codes within a market that is typical for corporate middle-management transferees."
Coldwell Banker is a division of Parsippany, N.J.-based Realogy, which was formed when Cendant — now Avis Budget Group — sold off its real estate assets. In addition to Coldwell Banker, these included Century 21, Sotheby's International Realty Affiliates, and NRT.
Other highlights of the study are that, once again, 9 of the top 10 markets in the U.S. are in California, with an HPCI average sales price of $1.4 million. These are, in descending order, Beverly Hills, Santa Monica, La Jolla, Santa Barbara, Palo Alto, Newport Beach, San Jose, San Mateo, and San Francisco. The only non-Californian market in the top 10 is Greenwich, Conn., which comes in at No. 8, with an average home sale price of $1,403,750.
Bargains abound
Don't be surprised that the boroughs of Manhattan fail to place in the top rankings. The reason is that, despite its astonishing prices, the city was not included because of its low number of single-family homes.
Other high-end markets on the list are Boston ($1.28 million); Ridgewood, N.J. ($1.01 million); and Kihei, Maui, Hawaii ($935,000). Of course, in all these markets there are properties with considerably higher price tags.
The most affordable markets in the country were: Minot, N.D.; Killen, Tex. ($140,310); Arlington, Tex. ($140,975); Grayling, Mich. ($144,250); Topeka, Kan. ($148,050); Canton, Ohio ($148,333); Tulsa, Okla. ($148,575); Billings, Mont. ($150,141); Fort Worth, Tex. ($151,250); and Cadillac, Mich. ($151,530).
There is no homeowner alive who doesn't occasionally find himself thinking: "Gee, why did I pay so much for my house when I could live somewhere just as big for a lot less money?" Binghamton may not be as close to Manhattan as Katonah, but the more than $700,000 difference in average home prices can be a pretty compelling argument to some people.