Should You Buy $5 Million Homes? When I help buyers find their dream home in the Barrington area the question of how much is the right amount to spend on multi-million dollar homes comes up more often since the real estate market and economy crashed. Will a purchase at $5 million get you much more than a purchase at $2 million. If I were in that position maybe I would think my extra millions would buy:
- More square footage.
- More bedrooms and bathrooms.
- Better construction.
- More acreage.
- More luxury features, gyms, pools, exterior stone work etc.
- Perhaps a finished basement over non finished.
- Walkout basements rather than only egress windows.
- More of everything.
- Younger aged property.
- Better location.
All of the above and more, right? I generally have a buyers agent hat on and as I look at some of the higher priced homes I cannot understand why some of the prices are where they are. Let me demonstrate what I mean.
Here are some active $5 Million Homes in the Barrington area.
Actually to prove my point I am going to look at homes in two locations, South Barrington and Barrington Hills priced above and below that $5 million figure. I’ll be taking the MLS data on face value, so it’s not guaranteed.
- House No. 1 $2,075,000 – Age 12 years – 9,600 sq ft.
- House No. 2 $2,075,000 – Age 10 years – 6,346 sq ft.
- House No. 3 $2,349,000 – Age 22 years – 7,734 sq ft.
- House No. 4 $2,888,888 – Age New – 7,372 sq ft.
- House No. 5 $3,870,000 – Age 15 years – 21,000 sq ft.
- House No. 6 $11,200,000 – Age New – 17,357 sq ft.
If you consider houses 4 and 6 as both new homes, even the additional square footage cannot justify why one is so much higher than another. Does location of house 6 add value, maybe, it is in a different neighborhood. But we are talking $8 million more. Savvy buyers are going to expect a lot more from house number 6.
Houses 1 and 2 are in the same neighborhood, same price, quite different in square footage. Not that I am saying everything is based on square footage but none of these homes are old, tired, decrepit and trodden down. In fact they are all pretty spectacular. And why is house 3 more than house 1 and 2 yet 10 years older?
Please note there are 28 homes listed here above $2 Million. Only one is under contract! Here we go.
- House No. 1 $2,100,000 – Age 84 years – 5,163 sq ft.
- House No. 2 $2,190,000 – Age New – 5,510 sq ft.
- House No. 3 $2,100,000 – Age 4 years – 10,766 sq ft.
- House No. 4 $4,495,000 – Age 15 years – 11,597 sq ft.
- House No. 5 $4,750,000 – Age 13 years – 19,438 sq ft.
- House No. 6 $14,900,000 – Age 9 years – 22,000 sq ft.
If buyers consider house number 3 as value for money against house numbers 1 and 2, it makes perfect sense why that is the one that’s under contract! Not that you all want double the square footage but if you did you would consider it a better buy, especially if you then compare it to house number 4 which has similar square footage but is older and twice the price plus some.
Why buy $5 million homes when you can get similar and younger for half the price?
Location is always a factor in value but I am picking homes from the same villages. Some cost can be attributed to additional acreage for Barrington Hills. There’s no doubt some of it will be because of superior building materials. Style is personal and layout are personal tastes too but how much value is in a different layout? The question is who will buy these $5 million homes when you can appear to buy very similar homes for $2 million? The only way to assess if you are willing to pay more is to look at each home and see what those extra millions are able to buy you.
Are you in the market to buy a luxury home in the Barrington area? We’ll always give you our honest opinions on home prices.
Contact Corinne at 847-363-3686