When real estate values dropped during the downturn and other investments lost their luster, luxury residences really became an investment focus and became a portfolio as much as a lifestyle purchase.
The luxury market has been leading the recovery for about two years. The pause button might have been hit on home sales this year, but the luxury market is keeping pace. Sales of the priciest 1% of homes in the U.S. are up 21.1% so far this year, following a gain of 35.7% in 2013. For the rest of the market, sales have dropped 7.6% since the start of the new year. There are currently more than 9 million millionaires in the U.S., according to Millionaire Corner Affluent Market Insightsand they’re spending. According to the National Association of Realtors, sales of homes costing $1 million or above increased 7.8% in March from the same period a year ago. During that same time, homes costing $250,000 or less dropped 12%
There are many factors stimulating the growth of the top sector of the real estate market. First of all, the wealthy are opting to invest in fewer stocks due to the volatility of the European markets. Instead, they are taking advantage of historically low mortgage rates and investing in real estate assets. Foreign buyers from Asia, Russia and Latin America are also contributing to the decreased inventory of real estate in the most sought after U.S. neighborhoods.
While it seems wealthy individuals are comfortable with the economic recovery and spending money again, that doesn’t mean they’ve totally forgotten about the housing bubble burst. When it comes to luxury home purchases, it’s not all about the McMansions. Many high-income buyers are not actually downsizing, but moving to big cities like New York and Los Angeles—the top two luxury markets in the U.S.
When it comes to buying a home with a seven-figure price tag, here’s what buyers are demanding:
Décor that Tells a Story. Owners want to be able to tell their guests stories about a home’s features. It’s like luxury travel; it’s all about the experience. They want their home to have a story.
Not Your Average Amenities. People paying top dollar want all the bells and whistles from their homes
Outdoor Living Space. Not only do these buyers want a big back yard that they can landscape and entertain in, they also want to be able to cook outdoors. Affluent homeowners want outdoor space that offers room for multiple gardens, swimming pools, and maybe even a putting green.
Every Chef’s Dream Kitchen. According to Leslie Piper, consumer housing specialist at realtor.com, 54% of luxury buyers identify a chef’s kitchen as their top feature when house hunting.
Green for Green. Expert says wealthy homeowners want properties that have environmentally-friendly appliances and features–and are willing to pay extra for them.
Wine Cellar. Move over wine fridge, luxury homeowners want a wine cellar that allows for both case and bottle storage.