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.