It's a question that came up recently, and the responses were immediate: The city penthouse, the country estate, the mountain chalet, and the beachfront retreat were instant winners. Cost was a factor, finishing touches and amenities were required, and bigger was always better.

And yet after reeling off a basic list of which homes most likely fit within the "luxury" category, the answers began to evolve. It turns out that while big homes attract attention, when it comes to where we want to live, most of us would choose something different.

Cost

By definition, luxury homes are not cheap. But they may be less expensive than the multi-million dollar homes featured in slick magazines and Sunday newspapers.

For instance, the cost of luxury is plainly greater in California, Boston, Washington, and New York than in most other parts of the country. Alternatively, you can get a huge home with lots of land and every possible amenity for relatively few dollars in many areas.

Cost is based on size and finish, but mainly on location. A San Jose cottage can clearly cost more than a landed estate in much of the country.

So, yes, cost is a measure of luxury, but a relative measure, one which says that a property -- when compared to others in the nearby community -- is expensive, but perhaps cheap to people who live most costly areas.

Size

We normally equate luxury with size, as though heft was a requirement of the good life. And yes there are utterly-enormous homes located just about everywhere.

Long ago, as one example, I remember visiting a house with 52 bedrooms and 27 baths. It had a kitchen with more square footage than many houses and the living room was large enough for public events. So who would live in such a palace?

Well, actually, "palace" is the right word -- the home was used by European royalty during World War II. After the war, no one else wanted to live in it and so it was sold to a religious congregation.

And that's the problem with size. Too much size requires a staff to maintain. Suddenly the owners have new obligations, they are in the "home administration" business dealing each day with a staff and having no privacy.

Many people subscribe to the idea described by economist E. F. Schumacher in the book, Small is Beautiful. Maybe we don't need giant homes. Is a two-bedroom co-op in the middle of Manhattan a luxury home? No staff needed, but the world is a few steps away.

Several years ago, Thomas J. Stanley and William D. Danko, wrote The Millionaire Next Door. It turns out that "next door" is a fairly modest place. The authors point out that typical millionaire household had a net worth of $3.7 million and an annual taxable income of $131,000.

As to real estate, Stanley and Danko found that 97 percent of those interviewed were homeowners, a typical residence was worth $320,000, and half of the rich had lived in the same place for more than 20 years.

So what's the definition of a "luxury home?" You can certainly buy a nice home for $320,000, but does this number register when we think of estates and penthouses? For a surprising number of people, "luxury" probably defines a house of reasonable size -- and the ability to afford far more.

For more articles by Peter G. Miller, please press here.

Published: June 21, 2001

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Peter G. Miller, also known as OurBroker®, is the author of six real estate books -- including The Common-Sense Mortgage -- and is the original creator and host of America Online's Real Estate Center. Peter's weekly columns appear in more than 100 newspapers nationwide, he is also published in a variety of other media outlets and he is a frequent speaker at national events and conventions. Peter welcomes your questions, comments, and news releases via e-mail at .