Most Expensive Sale in US History?

gt0518gtestate-201In what is believed to be the most expensive acreage in US history — the highest single family home sale price in the entire country — the 50-acre waterfront Copper Beech Farm estate sold Friday for $120 million. Purchased by an undisclosed buyer through the “Conversation Institute, LLC”, is a 51-acre farm with a mansion.  The acreage, the location, the price, and the history are all unparalleled! According to Curbed.com, the sale of the home at 499 Indian Field Rd. in the private Mead Point enclave, is the second-largest recorded in U.S. history — the most expensive being Montana’s Broken O Ranch, which sold in 2012 for $132.5 million.

The Copper Beech Estate, which had been owned by John Rudey, a timber magnate with holdings in Washington state, was built in 1898 by the Lauder Greenway family, who were founders with Andrew Carnegie of U.S. Steel. In the coming years, the sprawling stone-and-shingle mansion, built in the French Renaissance fashion, would crown an estate that grew to more than 100 acres at one time, before the Lauder-Greenway family began donating large parcels of land for various causes. It boasts 4,000 feet of private beach on Long Island Sound as well as two islands. comprised of a 30.6 acre parcel and a 20-acre parcel, the property listed in May 2013 with a pricetag of $190 million. There were price reductions and then an offered option of purchasing 30.6 acres of the estate — including the 12-bedroom main house — for $76.9 million.

Chinese Buyers Heat Up Los Angeles Property

chinese home buyers in los angelesBuying American real estate is becoming a fashion for some Chinese to show off wealth and status. According to a report by the National Association of Realtors  and  the Huron Report (a leading luxury publishing and events group) the United States is the number one destination to relocate to for more than 60% of China’s wealthiest residents. Chinese investors now make up the second-largest group of foreign buyers of homes in the US.  With a “huge” influx of wealthy mainland Chinese looking towards purchasing high-end properties across the U.S. China is now one of the fastest growing sources of international buyers in the U.S. real estate market. A report from the Bank of China said, nearly half of China’s richest are considering emigration, with the United States, Canada and Singapore being the top three destinations.

There are more Chinese homeowners in the U.S. today than ever before. Better economic conditions, business ties and easier travel sanctions contribute to this trend. In recent years, attracted by the pleasant natural environment, well developed economy, and great education resources, Chinese buyers flock into the property market in California, which is one of the top 5 property markets for international buyers.  The most common reasons for them to emigrate are their children’s education, a desire for better medical treatment, and the fear of pollution in China. Compared with the houses in China, the US properties are much cheaper in terms of price per unit area of land. They are worthwhile no matter whether they are bought for investment or self-use.

Many of them are calling Los Angeles home. LA area homes are in high demand for wealthy Chinese buyers, and in many areas this is pushing prices beyond boom-era peaks. Areas like Arcadia’s 91007 ZIP Code experienced an increase in median home sale price past $1.32 million last quarter, which is 30.5% past 2007 highs according to DataQuick. In the 91006 ZIP Code average home sale prices are also up 23.7%.

In view of that, many local contractors begin to add some Asian taste in their new constructions. Chinese Feng Shui element is taken into these new buildings. As the Bloomberg Newsweek reported, the purchases made by Asian immigrants, especially those from China, is one of the reasons for the booming of the property market in Southern California.

Home Buying Season Shaping Up

imagesPP39YVA8The majority of housing markets are entering the 2014 home buying season in significantly better shape than they were one year ago.  The outlook for a more abundant, more affordable selection of homes for sale this spring improved considerably in February.  This is signaling growing seller optimism and a strong, early start to the spring home-buying season. Sellers in most markets are responding to the price increases of the past year, suggesting they are increasingly optimistic about the housing recovery and the underlying strength of market demand through 2014, according to the latest February data from realor.com.

While February inventories remain low by historic standards, following seasonal patterns, they will probably continue grow over the next two months with the coming of spring. With the spring buying season around the corner, inventories of new listings are growing. Despite the increase in inventory, the median list price jumped by more than 2 percent in February. These list price increases are another sign of seller confidence going into the selling season as sellers price their homes in anticipation of market conditions in the coming months.

There are positive signs that the market is more balanced and that we will not see a repeat of last year’s overheated markets, soaring prices and multiple bid situations. On a year-over-year basis, the median list price and the size of the for-sale inventory were up by 7.57% and 10.14 percent, respectively. Record low inventories last January set the stage for a selling season featuring soaring prices, bidding wars and the outbreak of price bubbles in several California markets. The improved conditions for sellers prompted many to list their homes, but not enough to measurable improve the inventory picture as real estate markets go into hibernation to prepare for the 2014 season.

Luxury Around the World

luxury real estate around the worldIn a recent post we explored what really defines a home as luxury, since the term has often been abused. This is because “luxury” is subjective. Indeed, what one person might consider luxurious can be quite drab to someone else.

Regional markets, however, do have their own quirks, and usually the properties tagged with the “luxury” label in an area are comparable to each other. Here are a few major cities and the defining features of their luxury real estate markets.

New York

In the Big Apple, space is a commodity that is hard to come by. Luxury homes in the city might not necessarily be large in the physical sense, at least compared to rural and suburban homes in more spread out areas. No, luxury in New York is defined by uniqueness of design, history of the property, and the credentials of the architect. In a city where people of every personality type exist, your home has to have its own style in order to stand with the elite.

Chicago

Generally, the price point for luxury homes is $1 million or more. The area you target will determine what you can get for those millions you’re spending. In Chicago, you’re likely to be able to get a lot more property space than if you are in New York City. Chicago’s general real estate market actually has lower costs than many major U.S. cities, but it is also home to some of the highest purchases.    It has been noted that wealthy business people prefer urban situations so that they can easily maintain connections with business contacts. Being near an airport is convenient for those that travel.

Because of Chicago’s business-oriented vibe, luxury is defined largely by price tag, with size and amenities as supplemental factors. Pools and other outdoor features are big attractions for summertime usage.

London

In London, recent tax increases for homes priced over 2 million pounds are making buyers feel as if they’re not welcome in the city. This might be the explanation for younger buyers choosing other locations for their luxury purchases. Unlike New York and Chicago, London’s luxury market is on the decline.

Even more so than New York, London luxury is defined by the historical aspects of a property and the reputation of the names associated with it. Even new properties will emphasize historical-inspired architecture to use to its advantage. The story is the most important aspect of the property.

Thanks to Toby Lancaster for his contribution to this post.

Why the Luxury Housing Market is Hot

los angeles luxury housingThe real estate market feels like it’s bouncing back. Whether it’s Beverly Hills or Malibu, Bel Air or Pacific Palisades, the high-end Los Angeles real estate market has been the hot topic. The high end market has really been thriving — but why? Because there are hundreds and thousands of variables involved in the real estate market, it’s impossible to pinpoint a single cause for this development. But the luxury housing market is downright hot in several markets. Barring a stock market correction — unlikely given how investors reacted positively to the Federal Reserve reduction in bond purchases in December — the trend means the spring home buying season could be a good one, especially for those who are shrewd or lucky enough to have high-end properties in their portfolio.  The National Association of REALTORS® recently announced that sales of properties worth more than $1 million increased by almost a third in October 2013 nationwide compared to the previous year. In September, however, sales of the same properties increased by a whopping 40 percent. Not bad.

Knowing luxury sales are doing well is just the first step in taking advantage of the trend, of course. You also have to know why they are doing well, which means acquiring insight about why the wealthy have been growing wealthier in recent years. First, the stock market is going gangbusters. While naysayers predict a plateau, it still has plenty of room to grow. Just keep in mind that our luxury survey found that 75 percent believe that investing in a home is actually more a sound investment than the stock market itself! Second, foreign wealthy buyers are on the march, especially in in the West, where South American and Asian tycoons are investing in real estate. International buyers represented 23 percent of all home sales in Florida in 2013, for example. Given the difficulties of non-U.S. residents obtaining loans, they tend to pay in cash, too. Lastly, builders are swarming into the luxury home market after years of sitting on the sidelines, giving the wealthy more options. The new builds won’t depress prices anytime soon, however, according to Toll Brothers, because inventories are still low.

In addition to its value as an investment, there are many other less obvious benefits to owning high-end real estate. To own an expensive home up in the hills — whether it is overlooking a glittering city or a calm ocean — is a symbol of status; it is a culmination of hard work, sweat and tears. Furthermore, high-end real estate is usually secluded, therefore offering peace and quiet away from the hustle and bustle of the increasingly crowed Los Angeles County. Lastly, expensive property allows for more freedom and flexibility when it comes to personalizing one’s home; regardless of whatever an owner does with their house, the land itself will retain its value. All in all, the recent boom in the high-end Los Angeles real estate market is likely a good sign for the real estate market at large. Whether it is a luxurious mansion in Malibu, or a modest single-family house in Sherman Oaks, now is the time to find a great Los Angeles real estate and buy a home.

Experts Say Home Values to Rise Through 2018

043013_homeprices_600A recent survey of over 100 real estate experts and investment and market strategists asked panelists to predict the path of home values through 2018. Even the pessimists expect home prices to rise for the next five years. The idea that homes are a good stable investment has largely been debunked, in particular by Yale economist Robert Shiller. As usual, he is  reluctant to declare that home prices had bottomed. With that said, home prices are impressively up 23% from their March 2012 lows.

On average, panelists say they expected nationwide home value appreciation of 4.5 percent this year, with a steady slowdown in appreciation rates each year through 2018. But it’s worth noting that the most pessimistic quartile of those surveyed also see prices going up. It’s a modest amount, but they see prices going up a cumulative 10.9% through 2018. That’s a 2.1% rate annualized. Based on current expectations for home value appreciation during the next five years, panelists predicted that overall U.S. home values could exceed their April 2007 peak by the first quarter of 2018

Should we be worried that almost no one sees prices falling? The good news is that all of these home price bulls don’t see prices accelerating to bubble-era rates. Throughout the recovery, large-scale investors have purchased thousands of homes nationwide, particularly lower-priced vacant and foreclosed homes, fixing them up and keeping them in their portfolios as rental properties. This investor activity helped put a floor under sales volumes during the depth of the housing recession, but also created competition for many would-be buyers and contributed to rapid price spikes in some areas.

Panelists were also asked when the Federal Reserve should end its ongoing stimulus efforts, known as “quantitative easing.” Since September 2012, the Fed has been purchasing tens of billions of dollars worth of Treasury bonds and mortgage securities each month, which has helped keep mortgage interest rates low and stimulate demand. The program is now being wound down. More than 70 percent of the experts want to see the monetary stimulus reduced to zero before the end of this year, and the current pace of tapering will get us there.

The Rich Like Real Estate in 2014

elite10opThe rich aren’t just buying penthouses for the luxury. The real estate market is rebounding and U.S. millionaires say real estate is the top alternative asset to own this year according to Morgan Stanley. Morgan Stanley Wealth Management surveyed 1,004 U.S. investors ages 25 to 75. The investment bank released a survey on Friday showing that 77 percent of investors with at least $1 million in assets owned real estate, according to Bloomberg. Direct ownership of real estate was the number one alternative choice for 2014 and real estate investment trusts was the second most popular, according to the survey. The third most sought after alternative investment this year are collectibles.

Wealthy investors see stocks getting expensive and interest rates staying stable or even declining over the next couple of years, that’s why they are looking more closely at alternatives including real estate for returns and income. According to a separate study released, high net worth individuals who have at least $10 million in investable assets, increased their average allocation to real estate last year to 21 percent as of the fourth quarter from 19 percent in the first three months of 2013

There is also some sense of urgency to get into the real estate game, this year may be the tail-end of attractive investments in property before interest rates rise. Wealthy foreigners are also buying up high-rise properties in New York City. The interest in pricey U.S. properties stems from their safety because they’re denominated in dollars, the world’s reserve currency. This helps domestic millionaires maintain the value of their property investments.

Hybrid ARMs Dominate Mortgage Offerings

hybrid mortgagesHybrid ARMs continued to be the most popular loan product offered by lenders and chosen by ARM borrowers according to Freddie Mac’s 30th Annual Adjustable-Rate Mortgage (ARM) Survey of prime loan offerings, which was conducted January 6 to January 10,

Homebuyers have preferred fixed-rate mortgages the past few years because of the low interest rates and the certainty of the monthly principal and interest payment. As longer-term rates rise, ARMs with their lower initial interest rates will become more appealing to loan applicants. Hybrid ARMs are particularly attractive because they have an initial extended fixed-rate period of 3 to 10 years — and then adjust annually thereafter. Nearly all of the ARM lenders participating in the survey offered a hybrid. The 5/1 hybrid (a five-year fixed-rate initial period before the rate resets annually) was by far the most common, followed by the 3/1, 7/1 and 10/1. Far less common were ARMs where the re-pricing frequency was fixed for the life of loan, such as a one-year adjustable, a 3/3 ARM (which adjusts once every three years), or a 5/5 ARM (which adjusts every fifth year).

Banks are definitely doing more ARMs because they’re selling the consumer what they’re asking for, which is a lower monthly payment. In early January 2014, the interest rate savings for the 5/1 hybrid ARM with a 30-year term — the most common ARM offered in today’s market — compared to the 30-year fixed-rate mortgage amounted to about 1.36 percentage points. For a $250,000 loan, the monthly principal and interest payment on a 5/1 hybrid would be about $194 less than on the 30-year fixed-rate loan over the first five years of the loan.

Many borrowers with adjustable-rate mortgages were among the first to default during the downturn. When their rates adjusted after an initial teaser period, they were unable to refinance and got stuck owing sharply higher payments. This time around will be different, lenders say, because underwriting standards are tougher for hybrid ARMs, so borrowers will be less likely to get squeezed when interest rates reset. Moreover, regulators have all but banned the interest-only and balloon payment features that made ARMs ticking time bombs during the financial crisis.

For many, it makes a lot of sense to take a shorter-term mortgage, If the borrower is in a situation where they’re not going to be in that home for more than seven years, it would be incorrect for them to take the fixed rate when the ARM is giving them a benefit of lower monthly payments.

‘Luxury’ is a Much Abused Word in Real Estate

luxury real estateProperty ads urge us to “indulge in opulence” and promise to “pamper you in comfort”. While the glossy brochures and virtual tours may impress you, you often find that the features offered don’t justify the exorbitant price tag of a luxury home.

Luxury is by far the most abused word by residential real estate. As the term is freely used, it becomes important to know the essential features that define luxury.

Living space
Generous living space is a primary requirement of any well-designed home. Luxury homes must offer spacious living rooms,  large gourmet kitchens, well equipped media room and oversized closets  with elaborate systems to organize wardrobes, ample dressing areas and space to pack suitcases.

Attention to detail
In every aspect — from the wood work, to the wall coverings, the hardware, the electric switches, the kind of lighting. Technology is a significant detail with amenities like  home automation systems and electronic surveillance. — A luxury home remains pristine if well maintained.

Exclusivity
While these amenities may be widely available, one key must-have in a luxury home is exclusivity; it must be shared by a small number of people.

Your style
All said, you should see if what you are getting is ‘your’ style. After all, it may turn out that the designer features do not match your personality and definition of lifestyle.

Custom-built
Ideally you may wish to have every aspect — floor plan, materials, features, amenities — designed exclusively for you. Short of full custom, you will definitely want your luxury home to be customized with a high end renovation offering a move-in ready home

Low Inventories Threaten Home Selling Season

housing crystal ballRecord low inventories last January set the stage for a selling season featuring soaring prices, bidding wars and the outbreak of price bubbles in several California markets. The improved conditions for sellers prompted many to list their homes, but not enough to measurable improve the inventory picture as real estate markets go into hibernation to prepare for the 2014 season. November listings were only 0.18 percent above levels of November 2012, when inventories in the Realtor.com database had already begun the dramatic decline that culminated in the spring, 2013 shortages. With inventory levels enter the winter at virtually the same level last year, should sellers remain leery of the market, inventories may not restock sufficiently to meet buyer demand next spring, setting the stage for a repeat of last year’s wild spring and summer conditions. Despite the remarkable price gains in 2013-exceeding 13 percent through the third quarter in the latest Case-Shiller numbers and the freeing of millions of owners from negative equity sellers seem to be pulling back. Recent consumer surveys have tracked a significant decline in consumer confidence in home price expectations.  In addition, the share of those who expect mortgage rates to climb in the next 12 months remained at an elevated level since it spiked in June.