Five Hottest US Luxury Home Markets
Do you love to browse through the listings on Homes.com to “window shop” luxury homes? Or has your ship come in and you’d like to move somewhere that you can get the best deal for your hard earned money?
Most of us have no problem naming the hometowns famous for housing the rich and famous, like Beverly Hills, Palm Beach, Cape Cod, or Marin County. However, you might be surprised to know there are other places where luxury homes are just as pricey. Luxury homes in the most expensive markets may not be the best investments. Prices are rising faster in some places you might find surprising.
“Luxury” is a relative term in the real estate world. Not so long ago, homes worth $500,000 or more were considered luxury. Today, the most widely accepted cut-off point is $1 million but as the rich keep getting richer, some agents are insisting that the standard should now be $5 million. More importantly, home values differ greatly by market. A $500,000 home in one place might be the nicest in town, while in a market like Boston or Sacramento, it’s a starter home.
The upper end of real estate markets often behaves very differently than the mid and lower levels. Inventories of luxury properties are rarely depleted because builders are more motivated to build houses that are more expensive. Luxury buyers are more motivated by amenities and aesthetics and less by the factors that motivate average buyers like the need for more space, rising rents or rising mortgage rates. Luxury sellers can afford to wait longer for an attractive offer than average sellers, who are usually buying a new house at the same time and don’t want to be stuck paying two mortgages.
As a result, the national picture for luxury properties looks very different than conditions for mid or lower level homes. In August, the median price for all existing homes rose 4.6 percent over last year’s price, the 78th straight month of year-over-year gains, but the year-over-year gain for luxury homes rose only 0.8 percent. Luxury homes took longer to sell, spending an average of 47 days on market in August compared to the national average of 27 days.
The strong economy is creating new fortunes and more buyers who can afford luxury real estate. Over the next two years, the assets of America’s “ultrawealthy” population (those with $30 million or more in assets) will grow from $15.2 to $17.6 billion, an increase of 15.7 percent in just two years.
“The equity bull market is in the longest stretch in American history, and, as a result, there’s increasing activity among high net-worth individuals,” says David Parnes, luxury real estate expert and co-host of Bravo’s Million Dollar Listing Los Angeles told US News and World Report. “This should continue to boost portfolios and create a wealth effect, increasing confidence and funds to invest in luxury real estate,” he said.
Unlike the rest of residential real estate, luxury real estate markets are global. Jobs, schools, family and income levels tie most Americans to the places where they live. Ultrawealthy luxury buyers are only a chartered jet flight from family and friends. They have the means to live wherever they want. “They say all real estate is local, but that’s not the case when it comes to luxury real estate investments,” says Jason Haber, a broker with Warburg Realty in New York. “The luxury market is a global market; the buyer pool is international. As a result, it appeals to a larger audience and thus can command higher prices.”
Where the Ultrawealthy Live (Source Wealth X)
- New York-Newark-Jersey City, NY-NJ-PA
- Hong Kong
- Tokyo (Kanto MMA)
- Los Angeles-Long Beach-Anaheim, CA
- London – Metro
- Paris – Metro
- Chicago-Naperville-Elgin, IL-IN-WI
- Washington-Arlington-Alexandria, DC-VA-MD-WV
- Osaka-Kyoto (Keihanshin MMA)
- Dallas-Fort Worth-Arlington, TX
- San Francisco-Oakland-Hayward, CA
- Houston-The Woodlands-Sugar Land, TX
- Boston-Cambridge-Newton, MA-NH
- Philadelphia-Camden-Wilmington, PA-NJ-DE-MD
The Institute for Luxury Home Marketing publishes a monthly summary of US and Canadian luxury market trends that includes median sales prices, time on market and market status. Based on September data, here are the five hottest markets, where homes are selling fastest.
Five Hottest US Luxury Markets (August 2018)
|Markets (selected)||Median List Price||Median Sold Price||Inventory||Properties Sold||Days on Market|
For those who like to surf for luxury listings, below are five markets where the prices and numbers of luxury listings might surprise you.
Five Surprisingly Expensive Markets (August 2018)
|Markets||Median List Price||Median Sold Price||Inventory||Properties Sold||Days on Market|
It’s fun to review the newest luxury properties as they are listed for sale. These reflect the very latest in technology, styles, and amenities for those who can afford them. Tour luxury listings on Homes.com by simply entering a location, and in the “price” filter, enter either $500,000 or $1,000,000. Leave the right-hand side blank.