Luxury Insights

Blue-Chip hot spots sidestep housing downturn

In today's earlier post, you saw that residential real estate prices are clicking upward in numerous countries around the world.  Look closer to home and you'll also see that there's good news in the luxury home segment.  Forbes magazine reports that many of the nation’s “blue-chip” neighborhoods have largely sidestepped the housing downturn.

Properties in these  areas have held their value and in many cases increased just as steadily in the past two years as they have in the last 17. While this may be a function of location, location, location.  It is also a result of the strength of the upper-tier housing market. Note the median home price in each of the Forbes hot-spots below and you'll see what I mean.   

These neighborhoods, located in the country's 15 largest metros, have enjoyed the greatest total appreciation since 1990 of any metropolitan areas in the country. Forbes gathered data from NeighborhoodScout.com which aggregated information from the U.S. Census Bureau.

Here are Forbes top 15 hot spots, their median home sale price and price growth since 1990:

• Miami, Brickell Ave. and 13th St.
  
  • $623,492, 471 percent
• Los Angeles, Pacific Palisades
  
  • $3.1 million, 440 percent
• Washington, Rock Creek Parkway and Massachusetts Ave.
  • $2.84 million, 393 percent
• New York, Fifth Ave. and 70th St.
  • $2.45 million, 325 percent
• San Francisco, El Camino Del Mar and Lake St.
  • $2.2 million, 282 percent
• Atlanta, Ponce De Leon Ave. and Oakdale Road
  • $703,087, 237 percent
• Chicago, Lake Shore Drive and Route 41
  • $1.91 million, 236 percent
• Boston, Chelsea St. and Medford St.
  • $1.48 million, 221 percent
• Seattle, Laurelhurst
  • $1.12 million, 216 percent
• Minneapolis, Cedar Lake Road and Theodore Wirth Parkway
  • $305,290, 197 percent
• Houston, West University Place
  • $663,740, 194 percent
• Philadelphia, Walnut and Third streets
  • $914,115, 184 percent
• Phoenix, Village On The Lakes and Taliverde
  • $1.01 million, 177 percent
• Dallas, University Park
  • $898,640, 148 percent
• Detroit, Grosse Point Park
  • $510,578, 142 percent

If the stats are correct, they seem to reinforce the idea that the luxury market is alive and well in the U.S.

Global House Price Index Shows Strength in World Housing Market

Home prices may be starting to shift  from appreciation to depreciation in some U.S. markets, but home price news is good in much of the rest of the world.  If you work internationally, this is important information to know. 

The Knight Frank Global House Index tracks average house prices across a comprehensive list of countries across the world.  This unique index is based on an assessment of price changes in the mainstream housing markets of the countries covered.  The latest index report, which covers the 12 months up to and including 3rd quarter 2007, shows that while home price appreciation continues in most of the world, the rate of appreciation is slowing.  Nonetheless, there's lots of good news for homeowners in many countries. 

Here's Knight Frank's list of the top ten countries based on home price appreciation over the 12 months up to and including 3rd Quarter of this year as compared to the same period last year:

On an unweighted basis, prices globally rose by 8.2% for the year, compared to 9.6% for the 12 months through 3rd Q 2006. 

National Housing Market Report debuts

Institute members know that I believe that to be a real estate expert you must know what's happening in the market.  Altos Research, in partnership with Real IQ, just made it easier for you to track what's happening in 20 major markets across the country.

Starting this month, they've rolled out a new monthly report -- The Real Time National Housing Market Report.  While the report doesn't cover all markets, it will be a "trend indicator" that can give you valuable insight into the residential market in general.  Of course, you'll want to track your local market (real estate is still a local business), but this report provides data which either hasn't been available or has not been available on a timely basis. 

Here's some of what the debut report contains:

• Listing prices on properties in 18 of 20 major markets across the U.S. fell during the month of November. San Diego experienced the steepest decline with listing prices falling 5.8 percent as the recent wildfires exacted a toll on demand.
• Another key trend noted in the new report was an increase in the time-on-market duration for homes on sale in virtually all 20 markets.  Miami experienced the longest time-on-market span with an average days-on-market of 137 in November.  Minneapolis had the second highest average days-on-market at 125.
• Listed property inventory levels displayed seasonal declines in many markets with the exception of Las Vegas where for-sale property listings increased 6.6% over the past three month.  While inventory levels declined in most markets, Stephen Bedikian, partner and research director for Real IQ said, "We expect time-on-market will continue to lengthen and apply pressure on homeowner pricing decisions until buyers regain confidence and demand levels off. So far that point is not in sight."

Each month  you can find the updated version of the  report on their financial institutions page.
You can download this month's report here (PDF 243k).

More affluent households than ever before

Good news for those selling luxury properties...The Census Bureau' s latest report on U.S. household income shows a jump in the total number of households earning $100,000 or more.  Nineteen percent of the nation's 116 million households earned at least $100,000 in combined household income in 2006.  Here's how the top earnings break out:

It's all in how you say it

The owners of a wonderful luxury home often believe there are no properties which are comparable to their customized home.  So, when you arrive with your carefully prepared market analysis and begin to talk about comparable properties, they often are less than responsive to your information, because they are convinced there are no comparables.   

Consider changing your terminology.  Instead of comparable properties, use the term relevant properties.  For example, say, "These are the relevant properties with regard to recent sales."   Or, "these are the relevant properties currently on the market which buyer prospects may be considering along with your house."   A small change in terminology may help you overcome the objection that "nothing is comparable to our home."

What's Hot in Luxury Homes

Based on interviews with their luxury agents, Royal LePage Canada has just published their Top 10 must haves for today's multi-million dollar homes:

1. Elevator car lifts, indoor car washes - Luxury homeowners spare no expense for their priceless automobiles.  Avid car collectors, especially in city homes where property size is limited, install elevator car lifts to expand garage capacity.  Keeping a fleet of cars clean is no small feat. In fact, for many it necessitates an on-premise indoor car wash.
2. Walk-in refrigerators - Professional kitchens akin to what one may find in a five-star restaurant have taken over luxury homes. With growing emphasis placed on home entertaining, walk-in refrigerators and multiple ovens, sinks and dishwashers are the norm for even the novice gourmet.
3. Spas, gyms and yoga and Pilates studios - The home gym has undergone a makeover and the focus now is on complete health and wellness facilities. Professional-style spas complete with steam rooms and massage rooms overtake the outdated sauna or whirlpool. Yoga and Pilates studios trump stair climbers, treadmills and rowing machines.
4. Wine cellars and tasting rooms - Grand wine cellars often found in Rosedale, Forest Hill or Westmount residences are the norm for today's connoisseur. Individual cellars for red and white wines, as well as specialized tasting rooms equipped with various sinks and buckets for wine sampling are becoming all the rage.
5. Concierge services - Concierge services are no longer limited to condominium owners or hotel guests. Today's luxury homeowners utilize companies specializing in concierges. From making dinner reservations to picking up dry cleaning or purchasing opera tickets, concierge services are now a common trend within many luxury neighborhoods. There are several companies that will provide typical concierge services to homeowners - essentially acting as a live-out butler.
6. Media rooms - Media rooms that rival the local public theater are as prevalent in luxury homes as the family room.  These windowless rooms typically boast a theater-size screen, surround sound and rows of plush seats to accommodate large groups.
7. Wrapping and sewing rooms - Specialized rooms to accommodate particular hobbies or tasks, which are completely outfitted help to keep homeowners organized, are very popular. Dedicated rooms for gift wrapping boast everything from ribbons to paper varieties to bags and bows, while sewing rooms have every type of thread, button and zipper imaginable with tables and machines tailored to the homeowner's needs.
8. Structured wiring and security - A wireless home is a thing of today.  Many luxury residences feature security capabilities (e.g. door locking), entertainment options and light settings that can be accessed remotely throughout a home in various rooms.  Some properties are even equipped to remotely control security features in far away cottages or second homes.  Another innovative perk for those with deep pockets are security systems that allow property owners to view their home while at work, at the cottage or on holiday.
9. Home elevators - As homes are increasing in size, and are being built higher to accommodate several floors, home elevators are becoming an accessory of convenience as well as necessity.
10. Heated driveways, walkways and garages - Manual snow removal is a thing of the past for those in exclusive neighborhoods that favor heated driveways, walkways and even garages.  Built on top of heating coils, snow melts as soon as it touches these warm surfaces.

Don't think there are many surprises here.  The wine cellars, gyms, elevators, and media rooms are old standbys.   Heated driveways certainly make sense in snowy climes, but of course we won't find them on the wish-list down here in Texas!

It is interesting to note the inclusion of concierge services.  Not only do we see these services being offered as a value-add by builders and developers, but increasingly by luxury agents too.

As always, lists like this underscore the fact that luxury (and selling luxury) is all about lifestyle.