Prometheus 6

A Million Here, A Million There
What's a Seven-Figure House? Not What Many Expect.
By Dina ElBoghdady and Mary Ellen Slayter
Washington Post Staff Writers
Saturday, April 19, 2008; F01

Stephanie and Ed Aron figured they would spend about $850,000 to buy a home. But before they knew it, they were signing a $1.2 million contract for a newly built house in Bethesda.

"When I was growing up, a $1 million house meant you had a pool and a driver," said Ed Aron, 37, who is from rural Colorado. "But we're just a middle-class family."

For many home buyers, reaching the $1 million threshold can be an intensely emotional experience, even though that's not an unusual amount to spend in parts of the Washington area. Here, that kind of money can buy a wide range of homes, from a three-bedroom condominium in Cleveland Park to a waterfront estate in Calvert County.

No matter what you get for it, $1 million continues to sound and feel like a big number because of its "historical value," said behavioral economist Dan Ariely, author of the book "Predictably Irrational."

"Think of what we automatically associate with $1 million: millionaire," said Ariely, a professor at the Massachusetts Institute of Technology. "We don't distinguish between $1 million, $2 million or $5 million. We lump them together."

Categorizing and giving names to numbers helps us think about them, he said, and entering the $1 million arena feels like a big jump.

In many ways, it is. A $1 million price is more than double this area's median, $420,000. These pricier homes tend to be the province of move-up buyers who have built equity in previous homes, such as the Arons, who needed more space for a growing family. And the higher price comes with higher property taxes and, with larger homes, higher utility bills and maintenance costs.

Then there's the financing.

"The current mortgage environment makes financing that million-dollar home costlier relative to a more moderately priced home than was the case a year ago," said Greg McBride, senior financial analyst at Bankrate.com, a personal finance Web site.

But in the Bethesda neighborhood where the Arons live, the million-plus price is common. In their Zip code, 93 of the 148 single-family houses for sale are listed at $1 million or more, said their real estate agent, Joan Caton Cromwell. Three are $4 million or higher.

"We all think: 'If only I had $1 million,' " said Cromwell, who works in Long & Foster's Chevy Chase office. "We have all these grand thoughts about what we could get. But when buyers see what they actually can get for that inside the Beltway, they're often deflated."