Forbes – In Atherton, Calif., 94027, the most expensive home currently on the market is a 12,840-square-foot Mediterranean mansion with a $21.988 million price tag. Not a millionaire? Good luck finding a place to live in this Silicon Valley enclave. The least expensive home for sale in the 94027 ZIP code is a 1,370-square-foot, two-bedroom, two-bath bungalow. In other words, a starter home–with an asking price of $1.499 million.
The median price of the 24 homes listed for sale over the summer was $9.03 million, making Atherton the most expensive ZIP code in America for the second year in a row.
“Atherton is drawing a lot of young executives: CIOs, CFOs, and CEOs,” says Ken DeLeon, a Silicon Valley broker whose firm, DeLeon Realty, has $480 million in sales closed or pending to date this year. “And the international buyers really draw on the prestige.”
For Silicon Valley’s wealthy, Atherton offers proximity to the area’s tech start-ups as well as its big public companies, including Apple in Cupertino, and Facebook and Google in Mountain View. Another advantage over prestigious, yet further out areas (such as Woodside, home to billionaires Larry Ellison of Oracle and Scott Cook of Intuit) is Atherton’s relatively relaxed building regulations. “If you drive up and down Atherton Avenue all you see are huge construction, 12,000-square-foot homes,” DeLeon says. Younger, tech-rich buyers who want a more urban feel like that Atherton is just minutes away from downtown Menlo Park and Palo Alto, DeLeon says.
But Atherton 94027 is the only Bay Area ZIP—or California ZIP code, for that matter–to crack the top 10 on our 2014 list of America’s Most Expensive ZIP Codes. This year New York City dominates the list, with six ZIP codes among the top 10. Long Island’s Sagaponack 11962, in the town of Southampton, grabs the No. 2 slot, followed by three consecutive New York City ZIPS: Lower Manhattan’s 10013 (No. 3), the Upper East Side’s 10065 (No. 4) and 10075 (No. 5).
Full list here.
Behind the Numbers
Forbes’ annual list of America’s Most Expensive Zip Codes (full list here) is based on data from Altos Research, a Mountain View, Calif.-based real estate analysis firm. For this ranking, Altos calculated the median home prices for more than 28,500 U.S. ZIP codes (covering 95% of the U.S. population) using asking prices for single-family homes and condominiums listed for sale. To account for any blips that might occur when an unusually high-priced property comes on the market, Altos used a rolling average for the 90-day period ending September 19. For each ZIP code, Altos weighted prices according to the mix of property types in that market. As a result, ski towns with a high preponderance of condominiums see their median price pushed down, even if single-family homes in these areas are priced very high. Also, co-ops were not included, which may have artificially depressed the median prices for ZIP codes within some of Manhattan’s toniest Central Park neighborhoods.
We’ve used this methodology for many years, and it of course is not the only way to go. Closed sales, for example, are a more traditional metric for calculating an area’s median price. But we decided to use asking prices again this year for a couple of reasons. “Closed sales are by definition old data and a small sample size. The active market is what you experience when you walk in to a market right now and look around,” points out Mike Simonsen, president of Altos Research. “Where there might be a couple sales recently in Atherton, there are 24 on the market right now. In our analytic view, right now is a far better representation of ‘the market.’ ”
We think that’s a fair way to look at the market. “Asking price and sales price are highly correlated,” Simonsen argues. “Any given property may be over- or under-priced, but in aggregate they are essentially the same number. With the real-time measure, you just know four months ahead of time. “ Supporting this approach, a recent study by New York appraisal firm Miller Samuel found that in Manhattan, 49.2% of listings sold for at or above the asking price during Q3 2014.
Click here for a detailed description of our methodology, and the alternative methods we considered.
New York On Top
New York, of course, takes the cake, with neighborhoods in Lower Manhattan and the Upper East Side vying neck-and-neck to be the most expensive. In the No. 3 spot is the Big Apple’s 10013, prime SoHo (plus bits of Little Italy and Chinatown, and the historic Hudson Square neighborhood with its blend of townhomes and lofts.) This ZIP code repeatedly pops up among New York’s most expensive thanks to its relatively narrow range of housing types. “In SoHo, there are two thousand 4,500-square-foot lofts,” says Jonathan Miller of appraisal firm Miller Samuel. “You don’t have a large concentration of small apartments.”
ZIP code 10065 (No. 4) is most often associated with the Upper East Side’s Lenox Hill, the classic, prestigious stretch of Manhattan east of Central Park bounded by East 60th and East 69th Streets, characterized by pricey Fifth Avenue, Park Avenue and Lexington Avenue apartments and townhomes. Residents include David Rockefeller, Ronald Perelman, Robert Bass, and Sumner Redstone. With 20 single-family homes on the market and 50 condos, its median price is $5,931,289.
“When you have that much money, what you want is direct views of the park,” says Oren Alexander, of Douglas Elliman. “I have two clients right now that will spend $40 million and all they want is 5,000 to 6,000 square feet facing the park, on Central Park West or Fifth Avenue. And there’s nothing.”
Two years ago, ZIP 10065 ranked first on our list, and last year it ranked third. Since the ZIP runs all the way to the East River, this area also includes some lower-priced walk-up style apartments. A few blocks north, the Upper East Side’s 10075 runs from Central Park east to the river between East 76th and East 80th Streets and is almost as pricey, with a median price of $5,368,191.
“Central Park is the key to value on the Upper East Side,” says Paula Del Nunzio, the Brown Harris Stevens agent who sold Harkness Mansion, the most expensive townhome ever sold in New York, for $53 million in 2006. “If an apartment overlooks Central Park, Fifth Avenue, Central Park West, Central Park South, it’s more valuable than if it does not.”
Pricey vacation spots
Perhaps the most surprising ZIP code to make the top 10 is Woody Creek, Colo. 81656 (No. 7), an affluent enclave just north of Aspen in Colorado’s Roaring Fork Valley. With 17 single-family homes for sale at a median price of $4,953,269 (no condominiums), Woody Creek bests Aspen 81611 (No. 15, median price: $4,015,232); the two ZIPs are the only Colorado ones to crack the top 50. Journalist Hunter S. Thompson lived in Woody Creek, as did 60 Minutes host Ed Bradley, the Eagles’ Don Henley, and actor Don Johnson. Dianne Feinstein has a vacation home that overlooks Woody Creek. “Little Woody Creek is the expensive area,” says Joshua Saslove, of Joshua & Co., a Christie’s affiliate. Nearby, in 81611 Aspen, hedge fund billionaire John Paulson owns a home formerly owned by Prince Bandar bin Sultan of Saudi Arabia. Neighbors on Aspen’s prestigious Red Mountain include hedge fund billionaire Daniel Och, retail billionaire Leslie Wexner, and oil billionaire Sid Bass.
The only other ZIP outside of New York and California to crack the top 10 belongs to Alpine, N.J. 07620 (No. 6). This waterfront Bergen County strip is essentially a NYC suburb, directly across the Hudson River from Manhattan and 15 miles north. With a median $5,025,423 price tag based on 42 single-family homes on the market, its proximity to New York has made this ZIP a location of choice for high-profile buyers including Sean “Diddy” Combs (who also purchased a $39 million Holmby Hills estate this year), comedian Chris Rock, and singer Britney Spears.
Beyond the top 10, California sweeps the bulk of the top 20 with six ZIPs ranking between No. 11 and No. 20. Four spots are in Southern California–Beverly Hills 90210 (No. 11); Rolling Hills 90274 (No. 12), a gated community in the foothills of Los Angeles’ Palos Verdes Peninsula; Montecito 93108 (No. 14), the hilly enclave above Santa Barbara; and 92661 (No. 20), the Balboa Peninsula in Orange County’s Newport Beach. Two California ZIPs, Woodside 94062 (No. 17) and Hillsborough 94010 (No. 18), join No. 1-ranked Atherton as the three Silicon Valley ZIPs in this elite set. Rounding out the top 20 are 10024 (No. 19) on Manhattan’s Upper West Side, from Central Park to the Hudson River between 76th and 91st Streets; New York’s 11932 Bridgehampton (No. 13) and Water Mill (No. 16), a village in the town of Southampton; and 81611 Aspen Colo. (No. 15).
Not surprisingly, the overall list is dominated by California and New York, which account for 38% and 18%, respectively, of the 500 most expensive ZIP codes. Among the top 50, California takes 26 slots, New York 17, and Colorado and Florida each have two–33156 Coral Gables (No. 22) and 33109 Miami Beach/Fisher Island (No. 34). Four states managed to crack into the top 50 with one ZIP each, thanks to 98039 Medina, Wash. (No. 28); 89413 Glenbrook, Nev. (No. 31); 02108 Boston, Mass. (No. 40); and as mentioned earlier, 07620 Alpine, N.J.
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