Luxury Insights

Tax-fleeing French Create Home Buying Opportunities

“Au revoir ” is what many wealthy French property owners are saying to France as they flee to avoid the government’s proposed 2013 revenue squeeze on the wealthy.   With a possible 75% tax rate on salaries above $1.3 million, plus increases on capital gains, many affluent are selling their French residences and moving to tax friendlier locales.  Others are poised to s ell if the tax hikes take effect as expected.  As a result, inventory in the high-end of France’s housing market is increasing.  For buyers who are not primary residents of France, this is a boom.  They won’t be subject to the punishing taxes, have more residences to choose from, and growing inventory levels may cause prices to soften.     If you have affluent clients who dream of a French chateau or an apartment overlooking the rooftops of Paris, now may be the time to suggest they shop for a second home in France.  Can you say “bargain price” in French?  Try “prix d'occasion.”

To take a look at what France has to offer by checking out this Paris blog.  You can also read more about the tax-fleeing French in this NY Times article. 

Need to refer a client to France?  Remember that you can network with agents around the world on Proxio, the international MLS.  If you haven’t taken advantage of the free membership which The Institute provides, find the details in the members’ only section of our website.

Lights, Camera, and Action – Although Inventory is at Record-Low Levels, It Hasn’t Stopped Northern California’s Raziel Ungar from Producing Big Numbers

For Raziel Ungar of Coldwell Banker, selling luxury real estate in the areas where he grew up – Burlingame, Hillsborough, and San Mateo, California – is second nature.  And it’s this familiarity to his market that has propelled the 30-year-old to become one of the Top 10 Agents in Burlingame, to become one of the Top 1 Percent of all Coldwell Banker agents nationwide in 2011, and has put him on pace to close nearly two dozen deals this year.

As the youngest agent in his office, Raziel is bringing an entirely new and different way of marketing to the industry – in the form of video.  Find out how this former Jeopardy intern and film and video buff has successfully incorporated all of this and more into his business – and how it even helped him snag a $1.5 million buyer and others from the internet.

Raziel gives Institute for Luxury Home Marketing members his insider perspective on the Burlingame, Hillsborough and San Mateo County market.

What’s the typical starting price for the luxury homes segment of your market?

RU – In Burlingame, the starting point would be approximately $1.5 million, while Hillsborough would be the low-to-mid $2 million range.

What will $1.5 million buy you in Burlingame?  How about $2 million in Hillsborough?

RU – In Burlingame, you’d likely get 3 bedrooms and around 1,800 – 2,400 square feet.  The age of the home would vary and could be a refurbished home that could be as old as 80 to 90 years old, or it could be a much newer home.  A new construction home in Burlingame typically sells for around $2.2 million to $2.4 million and is usually 3,000 square feet on a 6,000 square foot lot.

In Hillsborough, all lots are a minimum of ½ acre.  And at the $2 million price point, a buyer can expect to get 2,500 to 3,000 square feet, likely 30 to 60 years old that may or may not have been updated.  The average priced home in this market in late summer was $3.2 million.

How would you describe the pulse of your market?

RU – There is a lot of action and not a lot of inventory.  Here’s an interesting example of how hot the market is in San Mateo County; the average sales price is 104 percent of the asking price.  Inventory is incredibly low – as much as 40 percent lower than previous years.

One of my more popular blog posts this summer took a look at Burlingame’s inventory over the past 24 months and came to this conclusion; in August we had the fewest number of homes for sale than at any point in the last 24 months.

How different is your market from last year at this time?

RU – The market is a lot stronger than last year at this time.  Prices are up 5 to 10 percent.  A lot of the activity is certainly due to the low interest rates.  Ten percent of buyers in Burlingame last year were cash buyers, primarily from the tech, biotech or financial services sectors.

The level of enthusiasm and low inventory are what sets this year’s market apart from last year’s.

Which segments are hot and where are the best opportunities in the market?

RU – Move-up buyers have the best of both worlds; low interest rates and they can take advantage of the appreciation from the last few years and move those gains into their next purchase.  First time buyers flush with cash from a recent liquidity event are also driving the lower-end of the market for sub $1.2 million homes.

How are you adapting your business to the market conditions and opportunities?

RU – My marketing is pretty different than most agents.  I focus a good amount of resources on video and feature my client’s properties, documentary style short films about the Burlingame community through my web series, Burlingame Buzz, and educational videos for buyers and sellers on my YouTube channel here.  I’ve just completed work on a video series featuring each neighborhood in Burlingame, and am aiming to produce videos for each neighborhood in my marketplace.

In fact, I employ a videographer 20 hours per week and I feature every neighborhood in Burlingame.  This has really helped my search engine rankings and was the reason a $1.5 million buyer found me and is now a client.

Film and video always interested me.  I went to college at UCLA and was even an intern on Jeopardy.  I’ve always had a huge interest in video and it’s great because now I get to incorporate it into my business and the marketing of my clients’ luxury homes.

What do they see ahead short and long term for your market?

RU – In the last 10 years or so, we’ve seen a shift in this market with buyers.  Places like this are a premium destination and buyers buy because they really want to be here for the long haul.

In the short term, I think we will continue to see low inventory levels through the end of the year, with perhaps an uptick in inventory next spring.  In my eight years of practicing here, I’ve yet to have a client tell me they felt like there were a lot of homes to choose from.

Using Bling to Buy Bling

The latest coveted piece of luxury may be coming in the form of a Visa gold card made of actual gold!  Let’s not forget the diamonds and mother of pearl adornment on this extra high-end card.

That’s right, a bank in Kazakhstan is planning to offer this bling-worthy card, made of solid gold and .17 carats, to its top 100 high net worth customers. Visa is touting the “infinite card” as the ultimate status symbol for the ultra-wealthy.  It’s said to offer the best of the best in customer service and be packed with accompanying benefits including health insurance, 24-hour phone service, and a brand new iPhone.

This flashy card comes with a flashy price tag of $100,000 ($65,000 for the card itself, the remaining $35,000 applied to the card as credit).  There’s also a $2,000 annual fee. But, you don’t have to worry about scratching or ruining your credit bling at the ATM, as the card itself does not possess a magnetic strip. You’ll have to pull out your everyman’s Visa for that.  Read More…

Kitchen Sprawl

Any Realtor can tell you that the kitchen is the heart of the house.  A recent article in The Wall Street Journal reports that we are more kitchen-centric than ever before.

Today’s kitchen is gobbling up more square footage and morphing into a multi-purpose great room made up of a showcase kitchen with commercial grade appliances, along with a casual family living area, dining space, butler’s pantry, powder room, adjacent outdoor kitchen and perhaps a second prep or catering kitchen, where  the “dirty work” like cooking and dish washing actually takes place.  Homes targeting Asian buyers may also feature a wok cooking area.   Read more…

A Revealing Look Into the Mind of the Luxury Home Consumer

So what’s going on with luxury home buyers and sellers in 2012?

It’s a question we’re often asked, and one that Laurie Moore-Moore , Institute for Luxury Home Marketing Founder, addresses head-on with her keen insight into the trends impacting the luxury home segment.

What exactly are the 10 new attitudes of the affluent? 

Laurie details them and much more – our friends at the highly respected
AG Beat have published her entire national column and thoughts profiling the luxury consumer here.

It’s a must read for all luxury home real estate professionals.

How Hot is Luxury Real Estate North of Boston? Even $1.55 Million Can’t Guarantee a Home

Sven Andersen, an 11-year real estate veteran whose RE/MAX Leading Edge team serves buyers and sellers North of Boston, has a huge dilemma in his market – namely, a total lack of inventory. But it’s a good problem, he says. 

“I have a buyer with $1.5 million burning a hole in his pocket with nowhere to live.  That’s a problem.”

We’ve asked Sven to give our Institute for Luxury Home Marketing members an inside look at what’s fueling his market, the challenges he faces and how he’s gaining more listings and selling more homes – using video.

What’s the typical starting price of a luxury home North of Boston?

SA – $1.2 million is about the starting price for a re-sale luxury home in North Boston.

What will $1.2 million buy you?

SA – For this price, a buyer can expect 2,500 to 3,000 square feet, 3 to 4 bedrooms, and a one-car garage. The typical buyer is someone commuting into Boston. We’re two train stops from downtown Boston, so a lot of lawyers, financial services professionals and professors live North of Boston.

How different is your market from last year at this time?

SA – The market is very, very strong with a lot of activity. Our sweet spot is $1 million to $1.4 million and there just isn’t any inventory. Right now the luxury market is challenging. If a home is priced right in this range, it will sell within 15 to 30 days for sure and likely have multiple offers.
A year ago, there wasn’t this much demand. With interest rates so low, buyers want to make an offer and pull the trigger like you didn’t see a year ago. The lack of inventory is quite shocking – typically we have well over 100 homes on the market for sale – now we half that number.

What noteworthy changes are you seeing in the market?

SA – I can’t emphasize enough how hot this market is. Here’s an example: I have a buyer for home listed at $1.5 million. We recently offered $1.55 million – a full $50,000 over the asking price and we had no contingencies. There were eight other offers on that home and we did not get it. So now I have a buyer with $1.5 million burning a hole in his pocket with nowhere to live. That’s a problem.

How are you adapting your business to the market conditions and opportunities?

SA – In a market as tight as this, you have to be aggressive and follow up on leads the minute they come in. Promptness is critical. That is why we are now tracking the time the lead comes in and the rate (minutes) at which my buyers agents respond. Why? Because it is proven the quicker the response the greater likely the conversion.

When it comes to listings, it’s all about producing high-quality videos of the luxury homes. Videos are what we are finding really help sell the listing (view video of Sven’s listing here).

What do you see ahead short- and long-term for your market?

SA – I see continued strong demand in this market due to move-up buyers wanting to take advantage of our proximity to Boston and capitalize on the low interest rates. This market will flourish.

There are developers right now who are building luxury homes and these homes are being sold privately, before they even hit the market.

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 Next week we'll be hearing from Raziel Ungar in Burlingame, California.

When It Comes to Luxury Condominiums in Toronto, Ania Baska Has 1,000 Reasons to Make the Sale

Few sales professionals can claim they’ve done something, anything, successfully 1,000 times in their career. But for RE/MAX Condos Plus Realtor Ania Baska, that’s the number of luxury condominiums in West Toronto’s Waterfront area she has sold over the course of her 17-year career.

Although the luxury condo market has slowed a bit during the summer months, Ania is looking forward to this November, typically the busiest time of year for her. The Institute for Luxury Home Marketing was happy to get her views and update on the unique West Toronto Waterfront condo market:

What’s the typical starting price of luxury condominiums in your market?

AB – The entry point for luxury condominiums in the West Toronto Waterfront area is $700,000. There are typically three parameters that impact the price of condos here: Does the unit face the water? What’s the size of the unit? Is the building new or a resale?

What will $700,000 buy you?

AB – It would depend on whether the building is new or resale, but typically for that price you would get two bedrooms and approximately 1,100 square feet. The average price per square foot is $600 to $700 for newer luxury condo buildings.

How different is your market from last year at this time?

AB – This summer slowed a bit. We’re down about 5 percent in terms of prices and maybe 10 percent for sales.

However, May was a good month and fairly busy. I was fortunate enough to sell the most expensive condo in the Luxurious Palace Pier area for $1.288 million, which was nearly 3,300 square feet. 

November is typically one of our busiest months so we’ll definitely see things picking up in the coming weeks. Overall it was a quiet summer with some movement with high-end properties.

What noteworthy changes are you seeing in the market?

AB – Parts of Toronto are growing very fast. About 10 minutes outside of downtown Toronto, there are about 2,000 new condos under development, many resales and high numbers of buyers. People consider condos to be good investments.

How are you adapting your business to the market conditions and opportunities?

AB – We’ve scaled back a bit. One full-time assistant went back to school and I will rehire another when the market picks back up.

What do you see ahead short- and long-term for your market?

AB – Overall, the condo market is solid. People understand that the Toronto luxury condo market is a stable investment and I think they will continue to feel that way for many years.

Here is some additional analysis from RBC on the broader Toronto condo market for the first half of 2012.

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 Stay tuned.  Next we'll be getting an update on the Boston luxury market from Sven Andersen.

In Sarasota, $16.95 Million Gets You an Incredible Unique Beachfront Estate – And Some Pretty Noteworthy Neighbors Too

Although the Sarasota, Florida luxury home market hasn’t been immune to the downturn most other markets have endured, Nicki Conway of RE/MAX Alliance Group thinks her market is poised for a distinct turnaround. And year-to-date data supports her views.

Nicki, who has been selling luxury homes in Sarasota for nearly a decade, gives us her insider’s look at this market.

What’s the typical starting price for the luxury homes segment of your market?

NC – For a country club or equestrian estate, the entry point would be approximately $800,000. For a home with a view of the water, the entry point would typically start at $1 million.
Our highest priced waterfront sale was $7.1 million while our most expensive country club home sold for $1.6 million.

Currently, our highest priced luxury estate is $16,950,000 and it’s a beachfront property located on Casey Key where Stephen King and Oprah have estates.

How would you describe the pulse of your market? 

NC – We’re seeing a lot of foreign buyers. And overwhelmingly, they pay with cash.
We’re also seeing an interesting trend: Some buyers are making offers with cash but then getting a mortgage because rates are so low they want to leverage their money.

I see prices continuing to trend up and there has been about a 2 percent increase in year-over-year prices.

How different is your market from last year at this time?

NC – Sales are quite brisk. It’s a confidence thing: People feel better about the market and have a better attitude about buying. Things are improving in the economy and as the saying goes, “If it’s properly priced, it will sell.” We have roughly a 4.5 month supply of inventory. Last year at this time we had 20% more properties available.

Which segments are hot and where are the best opportunities in the market?

NC – From what I’m seeing, waterfront homes seem to be hottest in the luxury segment. With that being said, I think there are opportunities in all areas of Sarasota. Think about it: Prices that are down 45 percent compared to 2005-2006, and no segment is really that much stronger than the other.

How are you adapting your business to the market conditions and opportunities?

NC – Over the past two years, I have heavily marketed on the internet to bring in new buyers. Now, it seems like the biggest challenge is finding listings.

Sellers are holding off a bit since prices are going up and inventory is going down which means listings are harder to come by.

I’m trying a new approach and have been marketing to higher end short sales and trying to get some of the luxury short sale listings.

What do you see ahead short and long term for your market?

NC – I truly believe it’s going to be dynamic. There is a lot of pent up demand. Many people have been putting off buying the luxury home they want because of a wait and see attitude. Folks from the Northeast, Canada and the UK are continuing to come to Sarasota to purchase a second home to live in for six months of the year.

However, a lot of people still have high expectations, thinking they can purchase a new home with beautiful bay views, a boat dock and lift, and access to the beach, for under $1 million. That’s not the case.

That perception is turning around as we educate our buyers with graphs and data and as the media comes out with more and more positive data about our real estate market. Properties are going to continue to rise in value.

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Stay tuned. Next week we'll be getting a peek at Tornoto's luxury condo market with  Certified Luxury Home Marketing Specialist (CLHMS) Ania Baska.

For Paradise Valley, Arizona, the Luxury Home Market’s Rebound is Hot

The summer temperatures aren’t the only thing rising in Paradise Valley, Arizona, a unique luxury home market that’s primarily made up of 1 acre-plus estates. With a population of just 14,000, this second and oftentimes third home destination market is surrounded by neighboring markets Scottsdale and Phoenix.

For an insider’s look at this market, we turned to Institute for Luxury Home Marketing Founding Member Michelle Kenny of RE/MAX Excalibur Realty.  

What’s the typical starting price of your market?

MK The entry point is $1.2 million. We’ve had 282 sales through the end of August this year and 142 of them have been $1 million or more.

How would you describe the pulse of your market?

MK – There is a lot of excitement in this market right now. Luxury agents are very positive right now and there are very few distressed properties listed. Generally speaking, we have recovered more than Florida and Nevada and California.
The market is strong and getting stronger. In June, Paradise Valley had 42 sales and the median price was $1,325,000 – that’s up 39 percent from the same time last year.

How different is your market from last year at this time?

MK – It’s amazingly different. There’s much more activity, energy and optimism. Last year we weren’t seeing as many sales and the days on market time was much longer. Buyers were much more aggressive last year and some sellers therefore decided to wait to list. There are a lot of buyers out there right now as evidenced by seeing 10 or more groups of serious buyers at open house times.  Right now, properties priced at $1.6 million and under are moving – typically in less than 30 days.

You’ve been focused on the luxury segment in this market for a number of years – do you see any similarities to past markets? What trends are you seeing?

Right now reminds me of 2002 when the market was still down. For instance, in 2002 I sold a house for $8.8 million in a down market. And that was a good price for that property – but you can just feel things starting to turn around.

One of the trends I’m seeing is buyers are not seeking as large of home as they did in 2005 or 2006. They prefer and quality over quantity and that would be more in the 5,000 – 6,000 square foot range as opposed to 8,000 - 9,000 in the past.

How are you adapting your business to the market conditions and opportunities?

MK - I am more of a people person rather than a high tech person so I continue to operate on referrals, continuing relationships with past clients (many of whom are now friends) and sometimes open house meetings. Clients know they are going to get personal service. When listing properties, I employ a professional photographer and have great pictures for presentation and the Internet. That's where I prefer spending my marketing dollars. I have spent copious amounts of money on advertising in the past. It pleases sellers, but I’m just not so sure how effective it is today. A good relationship with the other agents in the market is helpful.

Speaking of relationships, I belong to a terrific local luxury marketing tour group. We have over 400 members and it is unique to the valley. We meet twice monthly for breakfast, networking, and then tour and lunch. We get a lot of business done because of this and some homes sell once they are announced at the meeting and even before they are in the MLS.

What do you see ahead short and long term for your market?

MK - I see things continuing to go up. We have come through difficult times. In 2010, I sold a spec home for $2.3 million and that was a $5 million dollar house. At that time, a large number of spec homes sold for way under list priced and contributed to the market’s lowering of comps.

Our strongest buying and selling season is the fall through the spring. The second home market contributes to this. Currently all of the agents are saying that we need more inventory. In the town of Paradise Valley, as of late August there were only 227 active properties.

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 Stay tuned.  Next week we'll be hearing from Million Dollar Guild member Nicki Conway of Sarasota, FL.

From a $5.5 Million Luxurious Estate to Million Dollar Lakefront Properties, the Luxury Home Market in Arkansas is Alive and Kicking

Unlike the luxury home markets on each coast, Arkansas has its own unique blend of estates and luxury properties that luxury broker Ida Fineberg of  Steve Fineberg & Associates points out, “you simply get more for your money here – about ten times more.”

Ida, a luxury agent for more than a decade, focuses her efforts representing high end home buyers and sellers in four cities: Fayetteville, Springville, Rogers and Bentonville. Ida remains bullish on the luxury home market in Arkansas and believes “there’s something for everyone here.”

What’s the typical starting price of your market?

IF – The entry point is in the $500,000 to $600,000 mark. We currently have 57 listings priced at $1 million or more.  Our most expensive home is $5.5 million – an incredible 17,000 sq. foot estate perched on 48 acres in an absolutely beautiful area.   Homes priced at $1 million or more are typically on the market for 300 days.

How would you describe the pulse of your market?

IF – In this area, we were sort of in a bubble for a while and the real estate market has lagged. But we are seeing a higher number of people moving in and out who are executives here. So home prices are increasing slightly and people are finding that there are deals out there. It feels like there is more energy in the market and people are starting to get more positive.

Which segments of your market are hot?

IF -- Luxury homes located in gated communities seem to be hot. For people moving into this market who are used to living in upscale areas, gated communities are popular.  We have quite a few listings priced at $1 million and above. That’s the beauty of this market: there are a lot of options. From country club gated communities to lakefront properties, we really do have something for everyone.

What’s one of the top trends are you seeing?

IF – A lot more people are making this a destination area for retirement. I believe more people will move here to retire and get much more bang for their buck.

What do you see ahead short and long term for your market?

IF – I think things are going to remain steady. However, buyers are not stepping up as much as real estate agents would like them to because they are kind of in a holding pattern. But eventually they will get over their doldrums. Real estate can be like a roller coaster – it will come back up but it’s just going to take some time.  I’m a believer that there will always be a market for the luxury home buyer – it just might take longer to sell some of the homes.

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Stay tuned.  Next week we'll get the scoop on the Paradise Valley, Airzona luxury market from CLHMS and Million Dollar Guild member Michelle Kinney.