SUBURBAN PARADISE: This home at 10760 Raleigh-LaGrange Road in Eads has a selling price of $3.75 million. -- Photo Courtesy Of Marx & Bensdorf Realtors

It's true that a million dollars may not buy what it once did, but in Memphis it still will buy one heck of a home.

Some of that trend is the result of Memphis' and Shelby County's affordably priced housing, said Lew Alvarado, a research associate with the Sparks Bureau of Business and Economic Research at the University of Memphis.

"A million-dollar home in Memphis is probably $4 million on the California coast," Alvarado said. "So we generally have affordable (housing)."

A relative concept

The market in Memphis is part of a nationwide trend.

Chicago's market for homes between $1 million and $2 million was up 32 percent in the first quarter of 2006 from the last quarter of 2005, according to RealEstateJournal.com, a Web site operated by The Wall Street Journal. Almost 400 homes priced at more than $1 million sold in the Windy City and its suburbs during the first quarter of the year, according to the site.

In San Francisco, luxury sales are strong with 3,072 homes sold at $1 million or more in the first quarter of 2006, according to the site. The same is true for the Seattle area, where inventory has dropped off, but demand remains high with 241 homes sold in King County, Wash., at above $1 million in the first quarter of 2006.

Though overall residential sales in Shelby County dipped 12 percent in August over this time last year, according to real estate information company Chandler Reports, www.chandlerreports.com, this trend of high-priced homes continues rising.

A total of 505 homes over the half-million dollar mark sold in 2005, according to the Memphis Area Association of Realtors' Multiple Listing Service, which records the sales of homes listed by member Realtors. Through July of this year, 315 homes that cost more than $500,000 already had been sold, according to MLS.

"The trend is going up on million-dollar-plus houses in Memphis," said William Mitchell, president of MAAR. "It's gone up significantly over the past five years."

The number of half million-dollar or more expensive houses in Memphis and Shelby County has seen some significant increases in terms of the number of units being sold, Mitchell said.

In addition to the buying power of the employees of successful corporations in Memphis, such as FedEx Corp. and International Paper, and a growing economy, Mitchell said people are beginning to view their homes as more than investments. The people who are buying the $500,000-plus homes are able to defer their capital gains taxes after living there for three years, Mitchell said.

Good old steady Memphis

In 2001, 212 homes listed with MLS in Shelby County sold at or above $500,000, less than half as many as were sold in 2005.

Mitchell partially credits the stock market for the increase, saying it has been somewhat volatile in recent years. People have turned their investments to real estate because they have seen that it has been an anchor, especially in the Memphis market.

"We're encouraged by the numbers," Mitchell said. "The top brings the bottom up, and we hope that as time goes on, all segments of our marketplace see a huge increase in values."

What sets these homes apart from other homes - aside from their hefty price tags - is the custom nature of the homes' designs.

"The first benchmark of a truly fine house is the architect - a truly custom-designed home with timeless style," said Realtor Jimmy Reed, president and co-owner of Marx & Bensdorf Realtors. Reed has been selling real estate for 26 years and specializes in custom homes.

The homes are typically more than 6,000 square feet, he said. A custom home is one that is designed specifically to the design requests of the builder or homeowner, as opposed to choosing one of several plans provided by a builder.

Million-dollar babies

The increase in the number of custom homes being built by individual homeowners began a trend among builders and developers, who in turn began building custom homes to sell.

"Within the last 10 years, the broad depth of income and wealth in Memphis began to reveal itself," Reed said. "So now you see consistent speculative (for sale) housing at $1 million, $1.5 million.

"It really started as a custom market, and you had very few speculative-type houses of that category. Now there is enough confidence in the marketplace to build expensive speculative houses."

Other factors like rising household incomes and home-
owners who simply want to upgrade to larger houses also could have contributed to the increasing number of high-priced homes, Alvarado said.

A result of that need to upgrade simply could be a sign of the changing times.

"There was a time when a half-million dollar property seemed like an estate-type property in town," Reed said. "The number has shifted; estate-type property would be classified as a million-plus these days."

The majority of these $500,000 to $1 million homes can be found outside the Memphis city limits in places such as Germantown, Collierville and Eads, according to data from Chandler Reports. The largest number of homes assessed between $500,000 and $999,999 was in the 38139 ZIP code in Germantown, based on the Shelby County Property Assessor's 2006 records.

But the area with the most homes valued at more than $1 million is in Memphis - East Memphis, to be exact. Of the 673 residences - including condominiums and duplexes - valued above $1 million in Shelby County, 200 are in a neighborhood in the 38120 ZIP code in the eastern part of the city, according to information collected from the assessor's office by Chandler Reports.