Luxury Market Report Fall 2015 Table of Contents
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COLDWELL BANKER PREVIEWS INTERNATIONAL® LUXURY MARKET REPORT FALL 2015 TABLE OF CONTENTS Foreword 03 Previews® Research: Wealth, Real Estate and the High-Net-Worth Investor 04 The Previews Top 20: ZIP Codes and Cities for Luxury Sales and Listings 07 Domestic Overview: Seattle 11 Domestic Overview: New York 13 International Spotlight: Monaco 16 Previews by the Numbers 18 Disclaimers 19 A comprehensive look at luxury real estate. COLDWELL BANKER PREVIEWS INTERNATIONAL® // LUXURY MARKET REPORT // FALL 2015 2 FOREWORD The growth of the global economy as well as a rising emphasis on real estate as a wealth asset class have led to an expansion of the high-end real estate marketplace. In our second Luxury Market Report of 2015, we take a look at this expansion, and offer micro and macro analysis as it pertains to: • America’s top cities and ZIP codes for luxury home listings and sales • Wealth, real estate and the high-net-worth investor • Market activity in Seattle, New York and Monaco The list of Top 20 U.S. Cities for Luxury Home Listings and Sales reveals an exciting trend: the emergence of affluent luxury cities such as Houston, Dallas, Atlanta and Seattle due to organic price appreciation. Atlanta, in particular, is one maturing market to watch. The city saw one of the largest annual jumps in $1 million+ sales this quarter — up 70% from the same time a year ago — while active listings rose 57%. Million-dollar sales in Seattle also grew by double digits, which we discuss in more detail in our Domestic Spotlight. In terms BUDGE HUSKEY of ultra-high-end marketplaces, it always seems to be a tale PRESIDENT & CHIEF EXECUTIVE OFFICER of two coasts, with California and Florida leading the charge. COLDWELL BANKER REAL ESTATE LLC® Naples, Florida, continued its meteoric rise this year as sales of $10 million+ homes doubled, while Delray Beach and Palm Beach appeared on the Top 20 list for sales for the first time. Why is demand for luxury residential real estate expanding into these new territories? It’s a question with no easy answer GINETTE WRIGHT — but our annual consumer survey may provide insight. VICE PRESIDENT OF LUXURY MARKETING This year, we partnered with respected global research firm COLDWELL BANKER Ipsos MediaCT to better understand today’s high-net-worth PREVIEWS INTERNATIONAL®/NRT individuals (HNWIs) (defined in our survey as those with over $5 million in net worth, although 41% of our respondents reported a net worth over $10 million). Their outlook on residential real estate as a wealth asset class was overwhelmingly positive. On average, they own 2.1 homes for either personal or vacation use, and most of them (94%!) believe the value of their homes will increase over the next five years. For those believing values will rise, the average five-year expected increase was 16%. Another survey trend that could shed light on luxury market growth in second-tier cities and vacation destinations is one that we have highlighted before: an increasing number of HNWIs are truly mobile and seeking primary residential property investments based on lifestyle rather than location. As always, the Luxury Market Report is intended to provide a comprehensive view of the high-end residential real estate landscape, city by city and demographic by demographic. While it’s impossible to fully capture the movements and complex investing habits of the modern-day high-net- worth individual (HNWI), we believe this report highlights the unprecedented maturation of the global luxury real estate market today. It’s a development we will continue to watch and report on in the future. COLDWELL BANKER PREVIEWS INTERNATIONAL® // LUXURY MARKET REPORT // FALL 2015 3 PREVIEWS RESEARCH WEALTH, REAL ESTATE AND THE HIGH-NET-WORTH INVESTOR Rising home values are not dampening the interest of high-net-worth individuals (HNWIs) in making residential real estate investments in 2015, according to a survey of the wealthiest 1.5% of the U.S. population by Coldwell Banker Previews International® and Ipsos MediaCT. Reporting an average net worth of $8.5 million (42% reported a net worth of over $10 million), HNWIs generally have a positive outlook on real estate. They own an average of two properties, while their real estate holdings account for an average 38% of total net worth. INVESTMENT INTEREST RISES AS MARKETS SURGE Rather than discouraging new real estate investments, upward momentum in many high-end markets seems to have reinvigorated interest among the wealthy in real estate as an asset class. A 54% majority of HNWIs say that they anticipate making an investment in real estate this year, up from 48% who indicated interest in 2014. One-third (33%) of those planning an imminent purchase are doing so strictly for investment purposes, up from 21% who were motivated by investment appeal to make a purchase last year. WHY HNWIs ARE CONSIDERING A REAL ESTATE PURCHASE 40% 39% 38% INVESTMENT DESIRE FOR SPECIFIC SAFER INVESTMENT THAN APPEAL LOCATION STOCK MARKET Investment appeal exerts the strongest influence on purchase decisions today, with 40% of the HNWIs citing investment attractiveness as a reason to be in the real estate market. Other top reasons for planning a purchase are the desire for a specific location (39%), seeking a safer investment than the stock market (38%) and taking advantage of low interest rates (31%). CONTINUED COLDWELL BANKER PREVIEWS INTERNATIONAL® // LUXURY MARKET REPORT // FALL 2015 4 YOUNGER AFFLUENT ESPECIALLY EAGER TO INVEST Immediate interest in real estate investing is most widespread among HNW millennials (under the age of 35), 69% of whom plan to purchase a new property in the coming year, compared to 50% of Gen Xers (35-49 years of age). Just 17% of baby boomers (50 and older) expect to purchase new property in the coming year. PLAN TO PURCHASE NEW PROPERTY IN COMING YEAR 69% 50% 17% BABY BOOMERS GEN XERS MILLENNIALS Millennials are also leading the movement toward embracing a “live anywhere” lifestyle, a trend spotted in last year’s survey. This year, 85% of millennials say they are “free to choose a residence that truly fits my lifestyle and will not limit my search based on location,” a statement echoed by 69% of Gen Xers and only 29% of baby boomers. In addition to being more inclined to invest in real estate, younger wealthy consumers are also purchasing homes at substantially higher price points than are baby boomers. Gen Xers paid an average of $5.24 million for their last home, and millennials spent $4.96 million. Baby boomers, a demographic that tends to be in downsizing mode, reported an average closing price of $1.55 million on their last home purchase. A little more than one-fourth of all HNWIs paid more than $5 million for their most recent home, down from one-third who paid in excess of $5 million last year. This year, 85% of millennials say they are free to choose a residence that truly fits their lifestyle and will not limit their search based on location. CONTINUED COLDWELL BANKER PREVIEWS INTERNATIONAL® // LUXURY MARKET REPORT // FALL 2015 5 THE WEALTHY WANT HIGH-TECH HOMES WITH GREEN FEATURES In addition to gauging market outlook and plans for real estate investing among HNWIs, the survey also ranks the features and amenities they most desire. What they want is a home that’s ready to move into, cited by 43% of the wealthy as more important than it was three years ago. They also want homes outfitted with modern appliances and technology, as well as the latest in “green” features. A growing share (41%) of HNW homebuyers say that a fully automated and wired home environment is becoming more important, and 36% say that a LEED-certified green home is a feature that they find more important than they did three years ago. Open floor plans (36%), home gyms (34%), home theaters (32%) and safe rooms (30%) also figure more prominently among purchase considerations than they did in 2012. Less important More important Ready-to-move-into (NOT a fixer-upper) 3% 43% Fully automated/wired home environment 6% 41% Green or LEED certified 8% 36% Open floor plan 4% 36% Home gym 11% 34% Home theater 7% 32% Safe room 9% 30% Four or more garages 15% 30% Wine cellar or wine room 14% 28% Outdoor kitchen 10% 28% FINAL LOOK Pool 11% 27% These findingsSpace to displayoffer insight art collection behind the11% surging prices of high-end homes in many26 %U.S. real estate markets over the last fewSeparate years. guest The house increasingly10% bullish outlook of HNWIs, combined26 with% the interest of the younger generations of HNWIs in making new residential property purchases and their propensity to Deep-water dock16% 25% spend more on their homes, will likely sustain a rebound in property values and transaction volume of Separate catering kitchen 12% 22% homes selling at $1 million and higher in the future. Tennis court or other sport court18% 21% Staff quarters16% 18% Q3. Compared to three years ago, how (if at all) has the impor tance of these amenities changed for you? Base: All respondents (n=500) To download the full survey, visit www.previewsinsideout.com/HNWSurvey2015 COLDWELL BANKER PREVIEWS INTERNATIONAL® // LUXURY MARKET REPORT // FALL 2015 6 LUXURY LISTINGS BY CITY $5,000,000+ City State Number of Listings New York NY 939 U.S. CITIES WITH THE HIGHEST NUMBER Miami Beach FL 197 OF ACTIVE LUXURY HOME LISTINGS1 Greenwich CT 192 The Coldwell Banker Previews International® Los Angeles CA 152 program presents America’s top cities for luxury home Aspen CO 151 listings in three distinct price points: $1,000,000+, Park City UT 114 $5,000,000+ and $10,000,000+.