Last month we took a deep look at the mix of home prices in San Francisco and saw that there’s much more to a neighborhood than its median price. In some ‘hoods, there’s a mix of more and less expensive homes. Homes in other areas are either all mansions or all modest — in these places you’ll be hard pressed to find a home where you pay much less than your neighbors.
Now we’re taking the same analysis to the East Coast and looking at the mix of home prices in Boston.
In Boston, we found that the most expensive ZIP codes are closer to downtown. It’s not surprising that ZIP codes 02108 (Beacon Hill & Downtown) and 02116 (Back Bay & South End) have the highest prices— they’re close to great amenities like Boston Common and shopping on Newbury St. and are a shorter commute to downtown jobs. These neighborhoods are also some of the oldest and most historic neighborhoods in the city— 50% of the homes listed for sale on Trulia in the Back Bay and Beacon Hill were built before 1899.
As we move farther out from Downtown, home prices are a bit lower. The least expensive ZIP code in Boston is 02126 (Mattapan & Hyde Park), where the median home price is $229k. But median home prices aren’t everything; Trulia’s Home Price Range Index (HPRI) takes the analysis a little bit deeper to see where your budget can take you. Would you rather have the nicest home in Mattapan, or, for the same price, could you afford to be Tom Brady’s neighbor?
To figure out the range of asking home prices within different neighborhoods, we took all the for-sale homes listed on Trulia in 2011 in each Boston ZIP code and identified the 90th percentile asking price (a.k.a. the price of a home that’s MORE expensive than 90% of the other homes in its ZIP code) and the 10th percentile asking price (a.k.a. the price of the home that’s MORE expensive than only 10% of the other homes in its ZIP code).
We then calculated the Home Price Range Index by dividing the price of the 90th percentile home by the price of the 10th percentile home. Here’s an example of the calculation for the visual learners out there:
90th Percentile Asking Price: $1 million (aka Rabbit’s Home)
10th Percentile Asking Price: $100,000 (aka Eeyore’s Home)
Home Price Range Index = $1,000,000 / $100,000 = 10
Interpretation: Rabbit’s home is 10x more expensive than Eeyore’s home
So since ZIP code 02116 (Back Bay & South End) has a Home Price Range Index of 7.3, this means that a 90th percentile home in that neighborhood is 7.3 times more expensive than the 10th percentile home.
In that same vein, a neighborhood with a higher Home Price Range Index means that there is more home price variation than a neighborhood with a lower Home Price Range Index. Thus, 02108 (HPR Index =10) has a bigger range in home prices than 02119 (HPR Index = 2.7).
It turns out that the two most expensive ZIP codes also have the highest variation in home prices. ZIPs 02108 (Beacon Hill & Downtown and 02116 (Back Bay & South End) have Home Price Range Indices of 10 and 7.3, respectively. That’s a pretty large price gap between the most and least expensive homes!
Why the difference? Does the large HPRI mean that you can find a modestly priced, but comfortable home among the $3.7 million homes? Or do you have to make some big sacrifices to buy a home in the most expensive ZIP codes in Boston?
We took a look at what types of homes you’re likely to find if you’re shopping in the Back Bay or Beacon Hill without the million-dollar budget. While the lower priced homes in these neighborhoods aren’t really low-priced, the majority of them are very small, like this 263 square foot condo, which is only two blocks away from Tom & Gisele’s penthouse.
In fact, the median square footage for homes under $1M dollars in these two neighborhoods is only 770 square feet! If you plan to spend less than $500k, the median home is even smaller, at only 536 square feet. So, if you’re planning to be close enough to ask Tom Brady to borrow a cup of sugar, you should be willing to pay up for a small space.
So, what’s happening in the ZIPs with lower HPRIs? Some of these ZIPs are among the least expensive in the city, like 02126 (Mattapan & Hyde Park) and 02136 (Hyde Park), where you can get a lot more space for your money. In these areas, the median size for homes of $500k or less is 1,665 square feet, which is over 3 times larger than what you could buy for the same amount in the Back Bay or Beacon Hill.
In the end, it’s all about options. Would you rather sacrifice space to live near the celebrities? Or, for the same $500k, would you like to get a bigger home in a neighborhood where the homes are more similar to each other? Tell us what you think! And, of course, send us your votes for which city to visit next.