A million dollars doesn’t buy you what it once did. In most U.S. neighborhoods, it now gets you a lot more.

During the housing boom, prices rose so high and so fast that even cookie-cutter homes in the paved suburbs of South Florida and California could cost a cool million. In Santa Clara, Calif., a high-tech hot spot, the median price hit $836,780 in 2007.

That was a long way from the days when a million-dollar home evoked images of marble columns and swimming pools with vanishing edges. Subprime loans allowed more people than ever to buy houses that were once above their means. Higher demand fueled ever-higher prices until the spigot of cheap money was turned off and the housing bubble burst. The recession forced many well-heeled buyers into unemployment lines. And sales of homes over $1 million cratered by more than 50 percent from the peak four years ago.

“Everyone has less money than they once had,” said Amy Wright, an agent with The Real Estate Office in Rancho Santa Fe, Calif. “That has certainly affected the nouveau riche, and that’s definitely in that $1 million price point.”

For people who do have the money, however, it’s the best time in years to buy luxury real estate.

Rancho Santa Fe is a luxury enclave in San Diego County that has over the years lured the likes of Howard Hughes and Bill Gates. Equestrian trails border golf courses, and the most expensive home on the market is listed for $29.9 million.

A couple of years ago, the idea of getting a house in Rancho Santa Fe for a paltry $1 million was laughable. Now, foreclosures and financially distressed homeowners account for about 15 percent of sales, and home prices are down 30 percent.

In one golf-course community in the town, a 2,200-square-foot home is listed for $800,000. Residents live in a gated community where Spanish style homes surround a 250-acre Rees Jones-designed golf course and an accompanying 35,000-square foot clubhouse.

In the 20 largest U.S. metro areas, about 2,800 homes sold for more than $1 million in July – down by more than half from July 2005, according to MDA DataQuick. Nationwide, overall home sales were down about 27 percent, according to the National Association of Realtors.

In the month of August, sellers with homes priced above $2 million were cutting prices by an average of 14 percent, compared with the national average of 10 percent, according to Trulia.com.

The good news for luxury homebuyers is that they’re getting about 20 percent “more house” than they did two years ago, and the prestige of owning a $1 million home is returning, said John Brian Losh, CEO of luxuryrealestate.com.

That is, if they can afford the payments.

On Friday, the average interest rate for a 30-year “jumbo loan” (defined as a mortgage over $729,750) was 6.18 percent – about a point higher than a conventional fixed-rate mortgage, according to Bankrate.com. That means the mortgage payment for a $1 million home (with a down payment of 20 percent) would run about $4,900 a month, not including property taxes.

A buyer would have to earn at least $200,000 a year to make the payment plus taxes – and only about 4 percent of Americans fall into that tax bracket, 2007 Census data shows.

In Fort Myers, Fla., Pat and Dennis Tyeryar are trying to sell their four-bedroom, 3,795-square-foot house on three acres for $999,700. The property is a rare slice of lush Old Florida, with moss cascading off shade trees and views of a river and lagoon.

The property, valued at $1.4 million four years ago, is unique for the area because it sits on a peninsula: Every room in the house has a water view.

So far, no offers.

In a recession-battered place like Saginaw, Mich., however, a person can scoop up almost 18 houses for $1 million. Or, a buyer can get a 6,360-square-foot, two-story brick palace that sits on a five-acre estate.

The house is priced at $995,000. It has an indoor swimming pool and six bedrooms, but the property has been a hard sell in a market where a 2,300-square-foot home can go for $160,000, real estate agent Bruce Shaw said.

Shaw said the home would have been listed for about $1.3 million during the boom.

“It’s not like I get a lot of calls on it, not unless someone is moving from Southern California,” he said.

In Toledo, Ohio, agent Nancy Kabat has two listings that add up to $1 million – a six-bedroom, $635,000 house in suburban Ottawa Hills, and a three-story, two-bedroom condo on the Maumee River for $360,000.

The house has detailed crown molding and a renovated kitchen with granite countertops. It’s also near good schools. The condo has a view of Toledo’s landmark Anthony Wayne Bridge and is a short ride to an area with upscale restaurants and a vibrant nightlife.

“You could have a house in the suburbs for the winter and have a condo on the river in the summer and use your boat,” Kabat said.

If that approach doesn’t work, a buyer can pursue a three-bedroom, Mediterranean-style home in Toledo for $969,177, according to realtor.com. The 4,800-square-foot property was built in 2007 and has a three-car garage and upscale kitchen appliances like a stainless steel refrigerator and a dual-temperature wine cooler.

“We don’t have that many million dollar houses here, so it seems that they’re holding their value,” said Betty Lazzaro, an agent with Sulfur Springs Realty Inc.

Southern California housing market strengthens in December

In a typically sluggish month, the median sale price rises 4% over the same period a year earlier, and sales jump 12.1%. The pace of sales is the best since 2006, aided by tax credits that end soon.

A house in Long Beach has a buyer. One driver of sales is the April 30 expiration of tax credits for home buyers. Low mortgage rates are also a factor. (Nick Ut / Associated Press / December 17, 2009)

Rock-bottom interest rates and stronger sales in higher-priced neighborhoods helped Southern California’s housing market post robust gains in the typically sleepy month of December, new data show, and experts say the momentum is continuing — ushering in an early start to the spring home-buying season.

The median price paid for a Southland home rose 4% to $289,000 last month from December 2008, the first time the closely watched figure has posted a year-over-year gain since the region’s real estate market took a nose dive 2 1/2 years ago, according to data released Tuesday by MDA DataQuick, a San Diego real estate research firm.

Rebounding home prices could help the Southern California economy recover from its slump, as a stronger housing market could lead to hiring on construction sites and in real estate sales, title and escrow offices, said Esmael Adibi, director of Chapman University’s A. Gary Anderson Center for Economic Research.

“The worst is behind us for sure,” he said. “For the economy, the implication is, at least on the residential side, we don’t expect more layoffs, and you might actually see some pickup in employment.”

But Adibi noted that those gains could be tempered by continued weakness in the commercial real estate market, which includes office buildings, retail centers and hotels.

The increase in December home prices follows a dismal 2008. Even with the rise, the median price was still 42.8% lower than its $505,000 peak during several months in 2007, underscoring the steep decline in the latter part of the last decade. The median is the point at which half the homes sold for more and half for less.

Still, December’s sales pace was the best since 2006, capping a year in which strong government support of the housing market helped stabilize prices for most of the last year and brought more buyers back into the market.

“It’s time for me to move,” said Soosan Saedi, 43, who is looking to sell her three-bedroom, 1,300-square-foot Woodland Hills house and trade up to something bigger. “I need the space, the mortgage rates are low, and fortunately I am not having trouble with loans, so it is time for me to buy.”

The housing market’s recovery began last year as first-time buyers and investors competed for steeply discounted foreclosed homes. Now foreclosure properties are making up a smaller part of the mix. The gains in December also reflect a more diverse market, experts said, as prices were bolstered by increased sales in many mid- to high-priced communities.

Part of that trend shows the increased affordability of high-end properties as more are taken back by banks or are sold “short,” for less than what is owed on their mortgages, real estate professionals said.

“They have come down a lot,” said Syd Leibovitch, president of Rodeo Realty in Bel-Air. “I think the sellers dug in for a while, and now they are accepting the reality that prices have dropped, and they are being a lot more flexible.”

Beverly Hills, Santa Monica and Newport Beach were among the affluent areas notching healthy sales gains, according to DataQuick. Conversely, areas hard hit by foreclosures — including Moreno Valley, Lake Elsinore and Palmdale — saw a drop-off.

Christopher Cortazzo, a Coldwell Banker agent in Malibu, said he sold a home for $12 million in December, roughly $3 million below its listing price, and closed out the month with $26.5 million in sales, one of his best months of the year. Cash-rich buyers looking to capitalize on lower prices have rushed into the market in recent weeks, he said, and the sales pace has continued through January.

“Spring season is going to start early,” Cortazzo said. “We are having a lot of cash deals, so there is a lot of money out there, and there is amazing opportunity and great deals to be had.”

One thing driving sales is the April 30 expiration of tax credits for home buyers. First-time home buyers can get up to $8,000 in credit on their federal income taxes, and current homeowners can qualify for up to $6,500.

Low mortgage rates are also a factor. Thirty-year fixed-rate loans were below 5% through most of December and haven’t risen much.

The role of the federal government in the housing market remains key. Some experts worry that once certain policies and programs wind down — among them low interest rates, tax incentives for buyers and an increased accessibility of mortgages backed by the Federal Housing Administration — the housing market could falter.

Christopher Thornberg, principal of Beacon Economics, predicts home prices will drop once those policies and programs expire.

“The bounce in the housing market is due to government policy, not due to fundamentals,” he said. “None of these programs fix the underlying problem. They only delay the solution — they only delay the healing process.”

The percentage of Southern California homes that sold for more than $500,000 rose to 20.2% of all sales in December from 16.5% a year earlier, DataQuick said. That is well off the 52% level reached before the credit crunch hit in 2007, which made large mortgages difficult to obtain.

Richard Green, director of the USC Lusk Center for Real Estate, said buyers have sensed more security in Southern California’s real estate market in recent months and have begun to get off the fence.

“We are getting a little bit of what we had six or seven years ago, where people are worried if they don’t get in now they are going to miss out on an opportunity,” Green said. “In a decent neighborhood, in the half-a-million-dollar range, we are back to lots of offers.”

A total of 22,328 new and resale homes sold last month in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties, up 16.4% from November and 12.1% from December 2008, DataQuick said.

Still, uncertainty lingers. Unemployment and a potential wave of homes headed for sale because of foreclosure or delinquency loom over the U.S. housing market. Both could slow Southern California’s progress toward recovery should the Obama administration fail in its efforts to aid struggling borrowers. California’s budget woes could also bode poorly for the state.

“The fiscal picture is still really bleak, and that makes me worry,” Green said.

The home-buyer tax credit motivated Jennifer Scholte, 31, to close on a Lakewood home in December. The teacher said she and husband Eric, 34, saved up for a 20% deposit on the $361,000 property.

“We are first-time home buyers, and with that credit, that was a big push,” she said.

To take advantage of similarly minded buyers, Leibovitch of Rodeo Realty said he has hired 40 to 50 people in the last three months, including secretarial, marketing and administrative staff, to prepare for what he predicts will be one of the strongest sales years on record. Escrow of the West, a Beverly Hills company, said it would open a Sherman Oaks branch Thursday, creating 25 jobs.

Copyright © 2010, The Los Angeles Times