Living in one of America’s hottest luxury real estate markets, we should all stay aware and in tune with the fluctuations of the luxury real estate market. As an affiliate real estate agent of Christie’s International it has been very helpful to have access to their information and resources in the luxury market. Below we have provided helpful information for our Santa Barbara and Montecito friends and clients regarding growth in the Luxury Real Estate Market.
The global prime property market experienced solid growth in the number of $1 million-plus home sales in 2014, as many of the world’s most affluent recognized the intrinsic value of owning prime property, be it for the safe storage of wealth, a lifestyle upgrade, or as a “passion” investment. Averaging across six luxury submarkets surveyed by Christie’s International Real Estate for our 2015 Luxury Defined white paper, luxury home sales jumped 16 percent over 2013, with resort markets leading the upsurge in high-value sales across sectors.
After identifying record urban sales growth in many top global cities in our 2014 Luxury Defined report, we hypothesized that resort markets would follow the strong sales growth set in primary markets and surge to strong performance in the coming years. With Jet Set, Weekender, and Lifestyle & Regional Resort markets recording the highest increases in year-on-year volume, at an average of 28 percent, 25 percent, and 19 percent respectively. Notable sales growth occurred across many Jet Set Destinations in 2014, fueled by attractive investment opportunities and an emerging confidence among potential buyers that the market has bottomed and a recovery is well under way.
Spain’s sun-kissed Valencia region is seeing an uptick in sales, notes José Ribes Bas of Rimontgó. “Buyers are finding high-quality properties in privileged locations at very competitive prices, which creates a growth in buyer interest, especially those from overseas who pay in cash.”
That said, some markets still have significant growth ahead of them to return to normal levels. “Our luxury market is just starting to recover,” says Laura O’Conner of Trails West Real Estate in Whitefish, Montana, a prime ski and outdoor recreational destination. “We tend to run a year or more behind urban markets.”
The return toward a healthy luxury market mirrors the resurgence of consumer confidence and interest in purchasing second homes across all price ranges. According to the National Association of Realtors (NAR), the vacation-home market in the United States jumped by 54 percent in 2014 compared to 2013. This may be attributable to an uptick in interest from younger buyers, as evidenced by research from NAR and HomeAway, which shows that the median age of second-home buyers in the United States dropped from 55 in 2004 to 43 in 2014.
Several Global Economic Hubs and Metropolitan markets saw sustained firmness in their luxury market sales due to a strengthening economy and burgeoning value in luxury market prices. “Chicago is being ‘discovered’ as undervalued by investors who normally look to the coasts,” says Benjie Burford of CONLON Real Estate, where overall luxury home sales are increasing. “In 2014, we saw around a 15 percent jump in average prices and our firm experienced a 25 percent increase in the number of luxury homes being sold. The biggest sector of the increase was in new custom homes being built on teardown lots.”
Another solid performer in this sector was Atlanta, which recorded a 16 percent increase in year-on-year luxury sales. Buoyed by a strong local economy diversified across many industries, the area’s temperate weather and affordable housing continues to attract companies looking to relocate. “We continue to see more major corporations relocating or expanding headquarters and, as a result, more international transactions,” says Dan Parmer of Harry Norman, Realtors.
Suburban markets had the slowest pace of sales growth at just three percent in 2014. This reflects HNWIs growing preference for the conveniences and amenities of urban living and may also be indicative of limited supply of quality inventory in suburban areas. “While there were fewer sales in New Canaan in 2014 vs. 2013, the median sale price was significantly higher and, as a result, the dollar volume of sales increased slightly over 2013,” reports Barbara Cleary of Barbara Cleary’s Realty Guild in Connecticut.
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