Christie’s International Real Estate: “Luxury Defined” Survey

credit: Christie's International Real Estate

credit: Christie’s International Real Estate

 We all know that the luxury housing market operates on a different level than the residential housing market. They’re not subject to the same rules, trends or appreciation. They are largely insulated from money flows and political shifts. Luxury homes are trophy properties, which, like expensive art, come with a certain prestige and emotional attachment, unlike the average residential home an investor can flip and sell. 

Christie’s conducted this study in 10 cities: London, Cote d’Azur, New York, Hong Kong, Paris, Toronto, Miami, San Francisco, Los Angeles and Dallas. The study, called “Luxury Defined: An Insight Into The Luxury Residential Property,” can be found here to read for yourself. I wanted to share a few parts of the results that I found particularly interesting.

  • Of the 10 surveyed cities, there are fewer than 33,000 properties selling above $1 million. (The equivalent of all available properties in the Atlanta metro.)
  • San Francisco, LA and Dallas are experiencing a much greater number of buyers than there are available properties, leading to a 70 percent increase in luxury properties since last year
  • Luxury homes are two items combined: They are both real estate and a luxury possession. When economists and those of us in the real estate industry are making predictions, we consider both the market for luxury goods as well as the market for real estate. While many predict housing prices across the US in the non-luxury sector will increase only with inflation in the coming year, luxury goods are predicted to grow at about seven percent
  • Jeff Hyland, a CIRE affiliate in Beverly Hills agrees that luxury homes will go more the way of luxury goods than the rest of the real estate market in the coming year, noting that many of his clients are finding little return in the stock market and are instead recognizing the value in purchasing a home. With real estate, not only do you get to own it, but, unlike stocks, you also get to enjoy it in the meantime. 
  • The number one rule of real estate has always been, as you’ve certainly heard, “location, location, location.” That hasn’t changed. In fact, today, it’s even about micro-location. Buyers have expectations for the right balance of convenience and privacy, and they’re not likely to settle for less. 
  • One last note: While many international buyers, which consist of over 30 percent of luxury sales in seven of the 10 cities CIRE surveyed, are still financing, many U.S. buyers are paying in cash. According to the survey, almost 100% of sales over $5 in Los Angeles were paid in cash last year

Be sure to read the entire study on Christie’s International Real Estate’s website. It’s well worth the time. 

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~ by Craig King on September 5, 2013.

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