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8 Best Cities for Owning a $1-Million Home

Investopedia logoInvestopedia 09-09-2016 Greg DePersio
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The best cities in which to own a $1-million home depend on what factors matter most to you. For example, cities that rank high for value appreciation in this price bracket are not the same cities in which you get the most square footage for your money. Other factors to consider are property taxes, location and high-paying jobs in the area.

Best Value Appreciation: Denver, Portland and San Francisco

Of the 20 largest metropolitan statistical areas (MSAs) in the United States, Denver, Portland and San Francisco are tied for the best value appreciation at the $1 million price range in 2015. All three cities saw high-end home values increase by 10.9%. This means that with continued growth at the same rate — which is never guaranteed — a $1 million home purchased today would be worth $1,109,000 a year from now.

While San Francisco and Portland might be worth looking at from an investment perspective, neither city offers spectacular square footage for the money, even at a price point of $1 million. In fact, San Francisco residents pay the highest price per square foot in the United States, even higher than New Yorkers do. Portland is significantly better — you can find luxury 2,000-square-foot condos for $1 million, compared to one-bedroom, one-bathroom digs in the heart of San Francisco. But Denver tops the list for spaciousness among these three cities, offering ornate mansions on large lots in close proximity to downtown in the million-dollar price range.

Most Square Footage for the Money: Detroit

Having $1 million to spend on real estate in Detroit is tantamount to having a skeleton key that unlocks any home in the city. This is not an exaggeration — at the end of 2015, no single-family home within the Detroit city limits was priced at $1 million or higher on the real estate website Redfin. Some of the city's nicer suburbs, such as Grosse Pointe Farms, feature higher prices, but you can still find extravagant homes for much less than $1 million.

Value appreciation in Detroit, while not robust, was respectable in 2015 at 5.3%. If you are turned off by the city's spotty past and reputation for blight and crime, consider that Detroit's concerted effort to revitalize its downtown has been a noteworthy success and has begun to spread into outlying areas. The city's unemployment rate, which peaked at 18.7% during the Great Recession, was down to 5.7% as of May 2016.

Highest-Paying Jobs: San Francisco, Seattle and Washington, D.C.

The presence of high-paying jobs is important, even if you own your business or are independently wealthy. If you decide to sell your $1-million home or rent it out, demand is higher in cities where people have money to spend on such a property. As of November 2015, the richest U.S. cities in terms of gross municipal product (GMP) — a reliable indicator of high-paying jobs in an area — were San Francisco, Seattle and Washington, D.C.

Seattle's value appreciation rate of 8.8% is a little lower than San Francisco's, but you get more for your money there — a 2,000 square-foot, single-family home instead of a tiny loft. Washington, D.C. offers less square footage for the money — you probably have to settle for an apartment or loft if you want to live in the city limits — plus its appreciation rate is among the worst in the nation at 1.7%.

Other Considerations: Property Taxes and Location

Given that property taxes are higher on more expensive real estate, gravitating toward a low-tax state for a purchase price this high is worth considering. If low taxes are a priority, look again at Denver. In addition to Denver's price growth and square footage for the money, Colorado has among the lowest property taxes in the country. The average effective property tax rate in Colorado is only 0.61%.

Location is much more of a personal consideration for which it is difficult to offer broad advice. Things to consider before making such a huge investment include weather, traffic, congestion, recreational activities, sports teams, social life and demographics.  If you are going to spend $1 million, it should be somewhere you truly want to be.

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