Residents of America's most expensive small town get by without a chain store or even a traffic light. The town has one gas station, an elementary school, a community center, a general store, dairy and vegetable farms, and some restaurants and inns that open during the warm seasons.
Median home value is $2.237 million in Chilmark, a small town on Martha's Vineyard, an island south of Cape Cod. The town is home to 953 year-round residents, but the population swells dramatically during the summer when the rich and famous -- including Seinfeld creator Larry David and actor Ted Danson -- settle in for the summer. Chilmark, which includes the 300-year-old fishing village of Menemsha, has only 1,700 homes, many of them expensive vacation properties, and is the second-least densely populated town on the island. Houses rarely go on sale here, but when they do prices are high. On Sept. 12 a buyer paid $13.8 million for eight acres with a nine-bedroom home on it. In July, another buyer paid $15 million for 27 acres of land near the town's beautiful Squibnocket Beach.
"I definitely think inventory has a lot to do with it," Pamela Bunker, Chilmark's assistant assessor, said of the home values. "People are asking for high, high prices because people don't have to sell. We have amazing water views here. And the three-acre zoning keeps it really rural."
The Selection Process
Businessweek.com worked with Zillow.com to come up with a list of the 32 smallest towns with the highest home values. We set a cap on population of 10,000 people, although most of the towns populations fall well below that. In fact, many have fewer than 1,000 residents. We also only selected one property per Metropolitan Statistical Area, a geographical designation used by the U.S. Census, because otherwise the list would have nearly entirely dominated by towns near New York, Los Angeles, and San Francisco. (We did, however, include more than one home from the New York-Northern New Jersey-Long Island, NY-NJ-PA MSA because, frankly, it covers so much space that it seemed silly not to.)
Readers looking for certain towns may be disappointed not to find them on our list. Some, such as Jupiter Island, Fla., which is home to some of the most expensive homes in the country, has too large a population to qualify for our list. Others, such as Washington, Conn., were left off because Zillow.com didn't have enough data on them to come up with a median home price.
Besides high prices and low populations, what the towns on the list also have in common are great locations. Many of them such as, Chilmark, Stinson Beach, Calif., Water Mill in Southampton, N.Y., Block Island along Rhode Island's coast, and Haleiwa in Hawaii are known for their gorgeous beaches. Far Hills, N.J., is a beautiful New York suburb where you'll find large country estates, polo matches, and fox hunting. And the wealthy Chicago suburb of Kenilworth, which sits on Lake Michigan, is a tight-knit community with little room for new development.
Seasonal Resorts and Bedroom Communities
Yet these towns are not all alike. In fact, it would be quite easy to break them down into two separate categories: seasonal resorts and year-round communities. The former includes places like Chilmark and Water Mill, which chalk up their high property values to the influx of well-heeled summer people who are willing to pay top dollar for the pleasure of walking their beaches between Memorial Day and Labor Day. The latter includes Far Hills and Kenilworth, which are plush bedroom communities located a short distance from a major metropolis. The distinction is important, however, because many families looking for a place to settle may find Block Island, for example, a little inhospitable when February rolls around.
These are places with a restricted supply of real estate, much of which has been passed on from generation to generation in the same families. Residents want a small-town experience, and they are willing to pay higher taxes to keep it that way. These towns rarely have tax revenue from malls and office complexes to dip into.
"A lot of people in urban environments or fast-paced traveling environments are looking for a lifestyle change, even if it's 48 hours or a couple weeks out of the year," said Paul Boomsma, president of LuxuryPorfolio.com, the high-end marketing arm for independent real estate brokers. "They want to go out on the front porch and all they want to hear is birds. It's a great way to have a complete recharge experience."
One of the best features of Clyde Hill, a small town just across Lake Washington from Seattle, is its location. The town has two commercial areas: one is a gas station and the second is a coffee shop. But residents don't have to go far for action.
"We're across the bridge from Seattle and adjacent to the booming downtown of Bellevue," city administrator Mitch Wasserman said. "And you're able to take advantage of gorgeous vistas of Mount Rainier."
The question remains whether these places will continue to take advantage of their buoyant property values into 2009. While it's true that most of these communities have relatively few homes, and commensurately small turnover, what is fair to say is that by this time next year the list could be completely different. The reason is that inclusion is reflective of sales. If homes fail to sell, or prices come down, the town on this list may well be replaced by others next year. All it takes is one really big sale to change the results.