Housing 1998-2018, Part 2: America's Most Expensive Zip Codes, Then And Now

In part one of the study, Housing 1998-2018: A Look At Markets Utterly Broken By The Crash, we examined the string of real estate markets dealt irreparable damage by the housing crash in 2006-2007 and its fallout. In part two, we're looking at the most expensive zip codes in the United States over the long-term, from June 1998 to June 2018.

Introduced in 1963, zip codes are used by the United States Postal Service (USPS) to designate delivery points within the U.S. Over time, zip codes became part of everyday speech, transcending their functional origins — the epitome of which occurred in 1990, when "Beverly Hills, 90210" debuted on Fox that October.

Since zip codes denote mail delivery points, in time they coincide with developing housing markets. They therefore become useful in real estate, where they can be used to break towns and neighborhoods down into smaller units of property.

1998 vs. 2018: Similarities And Déjà Vu

When you compare the most expensive housing markets of 1998 to those of 2018, you'll find a lot of the same names and zip codes. For instance, zip code 94027, which covers Atherton, Calif., is the priciest zip code in the U.S., with a median home value of over $6.7 million, according to Zillow. Twenty years ago, it also reigned as the No. 1 most expensive zip code, with a median home value of over $1.4 million in June 1998. Take a look at the top-40 most expensive zip codes in 2018:

2018
Rank	Zip Code	City	State	June 2018 Value
1	94027	Atherton	CA	$6,747,500
2	90210	Beverly Hills	CA	$4,953,100
3	94301	Palo Alto	CA	$4,345,500
4	94022	Los Altos	CA	$4,267,500
5	90402	Santa Monica	CA	$3,911,500
6	94028	Portola Valley	CA	$3,753,200
7	94024	Los Altos	CA	$3,571,900
8	94305	Stanford	CA	$3,524,300
9	11975	Wainscott	NY	$3,402,600
10	11976	Water Mill	NY	$3,237,700
11	33109	Fisher Island	FL	$3,198,600
12	94306	Palo Alto	CA	$3,179,400
13	11930	Amagansett	NY	$3,092,400
14	10013	New York	NY	$3,089,100
15	90272	Los Angeles	CA	$3,084,100
16	93108	Montecito	CA	$3,053,500
17	95070	Saratoga	CA	$3,046,000
18	95030	Los Gatos	CA	$3,022,800
19	90265	Malibu	CA	$2,987,400
20	94957	Ross	CA	$2,891,700
21	92661	Newport Beach	CA	$2,871,500
22	98039	Medina	WA	$2,847,400
23	94920	Tiburon	CA	$2,802,600
24	92657	Newport Coast	CA	$2,792,500
25	92067	Rancho Santa Fe	CA	$2,780,800
26	94010	Burlingame	CA	$2,779,600
27	7620	Alpine	NJ	$2,772,500
28	92662	Newport Beach	CA	$2,770,900
29	10007	New York	NY	$2,748,000
30	90212	Beverly Hills	CA	$2,739,300
31	92625	Newport Beach	CA	$2,732,900
32	90049	Los Angeles	CA	$2,705,900
33	90077	Los Angeles	CA	$2,648,400
34	11932	Bridgehampton	NY	$2,629,600
35	94123	San Francisco	CA	$2,577,200
36	10012	New York	NY	$2,557,300
37	94040	Mountain View	CA	$2,556,600
38	90266	Manhattan Beach	CA	$2,504,500
39	94970	Stinson Beach	CA	$2,486,700
40	91108	San Marino	CA	$2,436,900

As in 1998, California dominates the list of the top-100 priciest zip codes in 2018, sharing a few spots with New York, Florida, Washington and New Jersey here and there. New York is the only other state to have more than two zip codes make top-100 list. Buoyed by real estate prices in Manhattan and on Long Island, New York can throw up numbers comparable to California's housing insanity. Zip code 11975 (Wainscott) boasts a median home value of $3.4 million, merely a hundred-grand-and-change less than that of zip code 94305 (Stanford, Calif.), which is $3.52 million.

Check out the most expensive zips in 1998:

1998
Rank	Zip Code	City	State	1998-06
1	94027	Atherton	CA	$1,475,800
2	92067	Rancho Santa Fe	CA	$1,231,900
3	33109	Fisher Island	FL	$1,209,100
4	94028	Portola Valley	CA	$1,117,700
5	90210	Beverly Hills	CA	$1,117,600
6	7620	Alpine	NJ	$1,067,300
7	94022	Los Altos	CA	$945,600
8	90402	Santa Monica	CA	$937,300
9	11568	Old Westbury	NY	$892,600
10	94305	Stanford	CA	$883,100
11	94957	Ross	CA	$875,700
12	94301	Palo Alto	CA	$860,800
13	94920	Tiburon	CA	$836,900
14	92091	Rancho Santa Fe	CA	$828,500
15	95030	Los Gatos	CA	$827,000
16	93108	Montecito	CA	$821,400
17	95070	Saratoga	CA	$815,500
18	92657	Newport Coast	CA	$793,200
19	94024	Los Altos	CA	$787,800
20	92662	Newport Beach	CA	$778,700
21	90077	Los Angeles	CA	$775,400
22	11024	Great Neck	NY	$772,300
23	90272	Los Angeles	CA	$756,500
24	60043	Kenilworth	IL	$745,800
25	90049	Los Angeles	CA	$745,400
26	6840	New Canaan	CT	$721,100
27	98039	Medina	WA	$714,400
28	89413	Glenbrook	NV	$702,200
29	92661	Newport Beach	CA	$701,900
30	10577	Purchase	NY	$699,800
31	10069	New York	NY	$699,000
32	77005	Houston	TX	$695,200
33	94010	Burlingame	CA	$689,000
34	90265	Malibu	CA	$686,400
35	2493	Weston	MA	$676,100
36	94123	San Francisco	CA	$671,400
37	92625	Newport Beach	CA	$650,300
38	90212	Beverly Hills	CA	$633,200
39	90274	Palos Verdes Estates	CA	$632,700
40	77024	Houston	TX	$627,200

The tech industry and related sectors fuel the livelihoods of millions of people in California — as well as the real estate markets. That was true in 1998, when Silicon Valley was pumping up the dot-com bubble as Bay Area home prices reached unprecedented levels. In 2018, the tech industry is vastly more developed, more complex and more intertwined with the entire region. Over the years, expanding businesses sprawled out into nearby suburbs and underdeveloped markets, inevitably increasing home prices, and creating several of the most expensive zip codes in America.

1998 vs. 2018: Changes And Divergence

Since seemingly the 1849 Gold Rush, California has been known for its pricey homes — nothing new there. Thus, there's a lot of continuity between the 100 most expensive zip codes in 1998 and the most expensive in 2018. At the same time, however, that continuity masks significant changes under the surface.

A prime example of what's easily missed is the fact that California zip codes have taken over the most-expensive list in the last 20 years; a shift from superiority to outright supremacy. In June 1998, 50 California zip codes ranked among the 100 most expensive in the U.S. Twenty years later, that number has jumped to 72 out of 100. In line with this, the top-100 list is homogenizing, its geography more and more limited.

The decline in geographic diversity of the zip codes is a subtle and unsettling development — a development that is at once both obvious and easily missed. Two decades ago, it was very normal for wealthy zip codes from states like Arizona, South Carolina or Missouri to have prices comparable to their California counterparts. In 1998, Cupertino's 95014 zip code had a median home value of $531,700. It was certainly one of the most expensive at the time, but notably less than a Massachusett's zip code (02030, Dover) and a Texas zip code (78746, Austin).

Fast-forward to 2018: Home values in zip code 95014 exploded, from a-half-a-million dollars in 1998 to nearly $2.4 million this June. Dover and Austin saw their fair share of appreciation over the years, but where home values in Dover's 02030 doubled, they more than quadrupled in Cupertino's 95014. In 1998, 14 different states were represented by the 100 most expensive zip codes. By June 2018, only eight different states made the list.

Who's to blame? There's plenty to go round, but nobody should miss one of the main culprits, Proposition 13.

Up Next: What It Costs to Live in America’s Most Expensive ZIP Codes

 

Housing 1998-2018, Part 2: America's Most Expensive Zip Codes, Then And Now curated from Forbes - Real Estate