The Luxury Housing Market: Summer 2011


Published on

Scott Sambucci (Altos Research) and Laurie Moore-Moore (The Institute for Luxury Home Marketing) present a look at the upper end of the US housing market, including demand drivers, price trends, and buyer-seller demographics.

1 Comment
No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

The Luxury Housing Market: Summer 2011

  1. 1. HOW’S THE “LUXURY” REAL ESTATE MARKET?LAURIE MOORE-MOORE, CEO SCOTT SAMBUCCI, COO The Institute for Luxury Home Altos Research Marketing
  2. 2. What we’ll cover• How’s the “luxury” market?• What’s driving relative demand?• Data, charts, and data… Miami, Las Vegas, Boston, New York, Los Angeles• Market effects of the Conforming Loan Limit change• Equities & Homebuilders
  3. 3. Las Vegas & Miami:Luxury Segment vs. Market Las Vegas: Lower price volatility in the Luxury segment since the crash Miami: Luxury segment showing positive year- over-year gains!
  4. 4. ILHM Luxury Index vs. Altos 20-City Composite Prices are down year- over-year, but in better shape than the national market……due to more constrainedinventory and relativelystrong demand in thisprice segment. Why?
  5. 5. S&P 500 vs. TIF & JWN
  6. 6. Before the financial crunch: There were about 9.2 million millionaires in U.S. in 2007 Based on total net worth including home equity 2008: millionaire count fell 27% to 6.7 million 2009: count rose 16% to 7.8 million 2010: count rose 8% to 8.4 million 2011: count back to 9+ million* Source: Spectrem Group, March 2011 Some sources say the count now exceeds 10 million
  7. 7. The “very rich”Even the very rich have not been immune.U.S. households worth $5 million or more,excluding primary residence, fell 28% to 840,000by the end of 2008, as compared to 1.16 millionhouseholds in 2007.In 2009, this number rose 17% to 980,000By 2010, rose another 8% to 1,100,000 March 2011, Spectrem Group
  8. 8. Count of HNWI’s on the upswing• Globally, HNWIs’ financial wealth grew 9.7% in 2010 to reach $42.7 trillion, surpassing the 2007 pre-crisis peak.• The global population of HNWIs grew 8.3% to 10.9 million• 3.1 million are in U.SSOURCE: Merrill Lynch CapGemni World Wealth Report, 2011HNWIs are defined as those having investable assets of US$1 million or more, excluding primary residence, collectibles, consumables, and consumer durables.
  9. 9. The “strained affluents” aren’t back• Ultra consumers spending to maximize lifestyle (without corresponding net worth)• They were driving mass luxury, fueling entry level luxury home purchases (often with creative loans)• They may be today’s short sales and foreclosures.
  10. 10. Good News for Luxury The number of million dollar home sales in 20 top markets jumped 18.6% in 2010* (California million dollar home sales were up 21%) NAR reported the over $500,000 market segments outperformed others in 2010*Source: DataQuick
  11. 11. 30% of the uber rich plan to invest in real estate during 2011 80% of those surveyed have assets of $50 million or more --Institute for Private Investors survey, WSJ, January 2011
  12. 12. The luxury consumer has a new set of attitudesBling is now limited to “Flamboyants” and the “Strained Affluents”
  13. 13. Luxury residential real estate is a portfolio play as well as a lifestyle choice
  14. 14. International buyers and sellers: A key component of luxury demand• Trophy properties (It’s a competition!)• Education related demand (Chinese especially!)• Investment• U.S. is “on sale” (currency issues)• Perception of stability• Desire for personal safety• Escape from geopolitical turmoil• Lifestyle• Tax concerns
  15. 15. Market specifics: Trophy Sales• Los Altos $100 million sale to Russian billionaire Yuri Milner• LA $85 million sale to 22 year old daughter of sports entrepreneur Bernie Ecclestone• Other big sales: --Bel Air, $50 million --Rancho Mirage, $42.9 million --Greenwich, $35 million --Corona del Mar, $34.1 million --Manhattan, $24.5 million --Lots of local record sales around the country
  16. 16. Market Specifics: Miami• First 7 months of the year 517 properties sold for $2 million+ (up 15.7% year-over-year)• In July, 62.8% of the 78 properties sold at $2 million+ were cash transactions• 5.5% foreign buyers (mostly Canadians)
  17. 17. Market specifics: Dallas• 2006 – 4.6% Dallas homes sold for $500,000+• 2010 – 5.4% Dallas homes sold for $500,000+ High end market share has increased Chinese are driving sales in the newest luxury condo in the Arts District.
  18. 18. Market specifics: Denver• June sales of $1 million homes up about 6% over last June• Top sale - $6.18 million in Littleton• List to sale ratio, 92.6%
  19. 19. Market specifics: Boston• The Boston Globe reported that the city saw a double digit price increase in its condo market in the second quarter of 2011. Median prices rose 10.2 % to $487,000 compared to the same period last year.
  20. 20. New York City Condos & Co-ops
  21. 21. Market Specifics: Aspen Fewer price reductions in the top price quartileBut even “cheap”homes in Aspen are$500k+ (i.e. bottomquartile)
  22. 22. Miami Beach Condos New listings bounced higher this Spring, and fewer price reductions in the top quartile… …along with tight inventory means steady DOM.Top 3 Most Expensive Miami Beach Homes sold in July 2011:
  23. 23. CA Coastal Markets Prices down in San Francisco but activity is higher  lower DOMLa Jolla prices up andDOM is lower
  24. 24. Beach towns: LA & Orange County: Prices showing resilience to increasing inventory
  25. 25. Days-on-market: Higher priced sellers exhibit more patience• HAURIN (1998), “The Duration of Marketing Time of Residential Housing Donald Haurin,” Real Estate Economics• GLOWER, HAURIN & HENDERSHOTT (1995), “Selling Price and Selling Time: The Impact of Seller Motivation,” NBER Working Paper No. 5071• ARNOLD (1999), “Search, Bargaining and Optimal Asking Price,” Real Estate Economics
  26. 26. “The Diminimis Impact of Conforming Loan Limit Changes”DISCERN Analytics: Brett Kornfield & David Bugajski June 2011
  27. 27. Matching Local Conforming LoanLimits to Community Locations
  28. 28. S&P 500 vs TOL, RYL, MTH
  29. 29. CONTACT: THE INSTITUTE FOR LUXURY HOME MARKETING & ALTOS RESEARCH Laurie Moore-Moore, CEO Scott Sambucci, COO The Institute for Luxury Home Altos Research Marketing (415) 931 7942 | @scottsambucci 214-485-3000 | @ilhm