Tag Archives: luxury

Highlands Luxury Real Estate Escapes April Fool’s Day Worries

It looked like another chuckle-worthy April Fool’s Day dispatch: CNBC’s webcast “Is NYC luxury real estate about to go bust?” It was barely 7 in the morning on April 1—but only the most bleary-eyed Highlands web watchers were likely to have been caught off-guard.

Pranksters had already made mincemeat of the credibility Friday news dispatches normally deserve. Web parodists had started early (against all common decency, the day before). Late on Thursday, Gizmodo had announced the sale of the “Moon Watch”—its $27,500 price tag justified by a housing made from genuine moon rock brought back to earth by the Soviet’s 1974 Luna probe. Sure.

Even before the sun came up, Google Express made its first sky-enabled delivery. Not by drone: the first delivery was an axe, dropped by parachute.

Duolongo advertised a miraculous new product—a pillow that uses Morse code to teach you a language while you sleep (“I went to bed speaking only English, but woke up bilingual. Buenos dias a todos!”).

So CNBC’s projection of doomsday for Manhattan luxury real estate—for April-Fools-wary Highlands readers, at least—would not have been taken very seriously. The problem was, it actually was authentic. Sort of.

The webcast was a segment lifted from the CNBC Squawkbox show, presumably aired that morning. The blurb promised, “CNBC’s Robert Frank takes the wraps off a new report that shows the luxury real estate market in NYC is about to crumble.” And it did have a promising setup for what (to anyone living outside The City, possibly including a few Highlands residents) might take to be breathtakingly unsustainable price levels. Some of the new records posted:

Average apartment sales prices top $2 million (for the first time)
Price Per Sq/Foot = $1,713
Number of sales = 2,877 (a jump of 8%)

But…so where is the promised luxury real estate “bust”? It didn’t seem readily at hand—especially after we were shown a 5-bedroom Central Park coop. It had been bought in 2003 for a pittance ($12 million). Now it had sold quickly. By regular Highlands standards, at least, that didn’t seem to evidence much luxury real estate crumbling, since the selling price had been $35 million. Frank explained that the owners had done “some renovating”—so we were momentarily left wondering if the crumbling was because they’d had to go to so much trouble…

No! The reason put forth was that many of the record sales resulted from contracts signed as much as 18 months earlier. So maybe it was possible that these high prices and sales volumes might not be sustainable. There was no evidence beyond nervousness about China and the stock market tumble (which had just reversed, oddly enough).

That the report on NYC luxury real estate was not an April Fool’s joke was a sort of April Fool’s joke in itself. Here in Highlands, those kinds of worries were less widespread. China seemed a bit remote—and the stock market had already come roaring back—but neither seemed to be key to Town’s luxury real estate. If you would like some authentically real-world market info, do give me a call!

Sapphire Luxury Home Features Meant to Capture Taste Shifts

When it comes to selling Sapphire luxury homes, you really can’t pigeonhole who the ‘typical’ buyer is likely to be. The 9% of buyers that make up the pool of ‘affluent’ prospects are themselves pretty much profile-proof—and the dollar value that 9% represents fluctuates substantially from one end of the country to the other. On the other hand, it is possible to take advantage of features that are growing in popularity with today’s luxury home buyers.

Realtytimes researchers found that affluent buyers are increasingly attracted to features that belong in the smart-home technology category. Smart thermostats that owners control right from their smartphones, wireless homes security camera arrays, and fully tricked-out home theaters are draws. To qualify at the high end, an entertainment center really should be controlled by a single device. Let’s face it: no matter how fancy a home theater might be, if three or four remote controls are visible, they’re certain to draw scowls!

Kitchen tech—of the kind that marries function with fashion—continues to gain in popularity. Bringing professional-level tools into domestic kitchens is a goal being incorporated in more and more top kitchen appliance offerings. On the leading edge: ovens with high-performance steam generators as well as blast chillers with touch-sensitive, intuitive user interfaces. All are designed “to create the kitchen that’s right”—one to match a buyer’s “level of culinary daring.” Digital Interiors found that 94% of such buyers “would sacrifice 1,00 square feet of living space for more technology…”—but keep in mind that most researchers find that, with few exceptions, 3,500 square feet is the non-urban baseline for qualifying in this market.

Selling luxury homes used to begin with location, location, location. But that may be undergoing a subtle shift. In Luxurydefined, one leading point is made that traditionally prominent ZIP codes are “no longer the defining baseline” for luxury homes. Newly included are areas where there is a “slower perceived tempo of life”—which fits in with the emerging interest in homes with ‘experiential’ features (like meditation gardens or outdoor showers).

Few of Sapphire’s luxury homes have those particular features, but being turnkey-ready is another matter. Brand new homes qualify automatically, but as has always been the case, existing residences that compete with other high-end homes in Sapphire can be expected to do best when they qualify as one of the ‘just bring your toothbrush’ properties.

Affluent prospects may be well-heeled, but they are also increasingly attentive to energy-efficient features. Some new homes designed with the luxury market in the crosshairs boast of ‘super-efficient’ floorplans built to consume 50% less energy than typical new homes. The draw is not entirely economical, either. That’s evidenced in how the current dip in energy costs hasn’t resulted in a proportional tapering in demand for homes reflecting conscious living (features reflecting environmental awareness and sustainability).

Luxury home owners, like their prospective buyers, have a pretty clear idea of what they demand when it comes to selling their properties. First and foremost: an agent with comprehensive knowledge of the local market—and experience with luxury homes. According to Money magazine, sales at the high end are growing faster than in any other market segment…which is another way of pointing out that if you are looking to get into our Sapphire luxury home market, now is a pretty good time to give me a call!

A Place Where Home Asking Prices “Have No Shame”

I’ll admit it: the tease was irresistible. There was no good reason why I should take the time to read on, even though it was near the top of the Wall Street Journal’s Real Estate section. This was not likely to be the kind of relevant background information that would be useful in my daily Highlands real estate dealings.

But the tease was not something I could just skim past and forget. The words were dangling there on the screen; almost a dare:

“Where Home Prices Start at $115 Million.”

It wasn’t just the $115,000,000 home price that aroused curiosity. After all, this was the WSJ Real Estate section—where there are almost always stories about properties somewhere or other in the world with asking prices that numb the mind. It was the idea that there could actually be anywhere on Planet Earth where home prices start north of one hundred million!

Think of what the comparables reports would look like!

Now, I was fairly certain the answer wouldn’t be Highlands—home prices here tend to be considerably more modest. But the way the tease was worded, it seemed likely they were talking about somewhere in the U.S., because the home prices were in dollars. A whole lot of dollars.

Before clicking on the READ MORE box, I tried to guess the answer. Somewhere in Silicon Valley? Downtown Manhattan? Connecticut? Palm Beach? None of these seemed likely, if I recalled earlier articles about the haunts of the famous and newly down-and-out who are having to give up their mansions (often because they are scraping the bottom of the barrel, down to their last $10 million). Those estates usually have home prices in the $ single million range. I decided there must be some gimmick, wherever it was.

So I gave up and clicked:

Los Angeles.

Bel Air, to be precise—“in a new development.” And the gimmick is that this is a three-home development, “The Park Bel Air.” And it seems that none of the homes are actually built yet. These are spec homes in an 11-acre development “currently under construction.” Asking home prices do start at $115 million “and go up to $160 million, with upgrades and custom furnishings.”

I spent a minimum of time musing over what kind of upgrades would bring in the extra $35 million, and skipped down to the part where, elsewhere in the L.A. area, there is a spec home with an “unprecedented” asking price of over $500 million. The head of a New York-based appraisal firm was quoted as saying, “It’s almost as if there is no shame in wildly overpricing a listing anymore.” And down there near the very end, the article admits that there is only one thing missing from the phenomenon. Buyers.

This December’s Highlands home prices are certainly bargains—particularly when compared with The Park Bel Air’s. There are other advantages, too: they are actual homes that are already actually built, instead of just planned. Give me a call: we can actually go visit them!

Factors that Shape the Sapphire Luxury Residence Market

When you have a Sapphire luxury residence ready put on the market, you are about to enter a specialized area of the real estate realm. The luxury home market is, as the name implies, other than ordinary—and so are some of the ways to effectively navigate through it.

First off, we have to recognize the importance of the fact that the pool of prospective buyers is a good deal smaller than that for a standard home. By the National Association of Realtor®s’ assessment, it comprises only about 8% of the buying public. This speck of a target audience might seem to create a discouraging marketing handicap—but it’s balanced by the fact that these well-heeled buyers are only attracted to about 8% of the homes presented in the Sapphire listings. These buyers have more defined objectives than most: a true luxury home prospect isn’t about to accept any other than a high-end residence. Because there are fewer of such properties on the market at any given time, your own luxury residence stands to benefit. Limited supply is, after all, the simplest marketing cure for a limited demand situation.

One characteristic that distinguishes the best luxury residences is exactly that: it’s distinguished. Luxury residences do well when they have distinctive, notable features in their design or setting—even better if those features create a theme that’s memorable. Lacking that, a property may be able to depend upon sheer size or quantity (bedrooms, bathrooms) as well as quality construction to validate its place in the luxury category.

To be in show condition, a property in any category that is up for sale in Sapphire needs to be well maintained and presented. But for luxury residences, there may be a difference in the degree of attention required. The finer the property, the more attention any lapse attracts. Fair or not, people have a tendency to notice (and remember) even minor maintenance miscues—anything that stands out. The last thing you want is for a minor flub to be the most memorable thing a prospect takes away after an otherwise sterling showing.

There is also a seemingly extraneous factor that can help a luxury residence sale: the homeowner’s disposition. Eligible buyers in this category are typically busy people with demanding schedules. They may also be used to calling the shots in their own careers—and as potential buyers of an expensive property, assume they will be treated like what they are: VIPs. Since the owners of Sapphire luxury residences probably have similar credentials deserving the same degree of deference, being asked to accommodate a buyer’s sudden schedule change can be grating. The more understanding an owner can be, the more likely to result in the kind of positive atmospherics that produce the hoped-for result.

The actual mechanics associated with the sale of a luxury residence are generally more involved than with run-of-the-mill home sale transactions because financing, inspections, etc. are usually more time-consuming. To keep the proceedings on track and as efficient as possible, a key ingredient is the same as that which propels the entire process: close communication between the owner and the owner’s Realtor.

It starts with the kind of no-obligation consultation I’m pleased to offer—and it’s only a phone call away!

Highlands Real Estate Watchers Note Rise in U.S. Jumbo Loans

2-27-jumboloanInside Mortgage Finance is a periodical that precisely lives up to its name: Highlands residential real estate professionals can turn to it for the latest word on national trends inside the mortgage industry. Admittedly, this usually makes for pretty dull reading for outsiders (that is, everyone else); but one story in last week’s edition was interesting enough that it was picked up by the general business press.

The topic was jumbo loans. In Highlands real estate circles, the issuing of jumbo loans is of particular interest because of their indicator status. Jumbos are the ones with mortgage amounts exceeding the limits for government-backed loans. They’re also known as ‘nonconforming’—and like all the other non-conformists in life, they don’t quite behave like everyone else. Highlands jumbo loans tend to be slightly harder to qualify for than run-of-the-mill mortgages, and as a rule carry higher interest rates. If their share of the home loan market grows, it indicates that high-end home sales are improving.

And that’s what happened in the U.S. in 2014, according to IMF. “Jumbo Lending Stronger than Overall Market, Hits Highest Share in 10 Years” was the headline in a report that pegged fourth quarter jumbo loan volume at $67,000,000,000. That’s a lot of high-end real estate!

When The Wall Street Journal picked up the story, they pointed to a decrease in mortgage lending overall, but pointedly less so for jumbo loans. Bank of America reported a 3% growth in the number of first-time home buyers who took out jumbos in 2014—and applicants were a younger bunch, too: their average age decreased from 46 years to 44. Wells Fargo Home Mortgage, the largest jumbo provider, observed a similar trend: more first-timers taking out jumbo loans.

If this has local real estate watchers wondering whether the popularity of jumbo loans in Highlands will follow the national trend (and if so, why), there was at least one straightforward explanation. HSH, the housing and mortgage data firm, reported that by the end of this January, the average interest rate for a 30-year fixed jumbo mortgage “dropped below 4% and was at a historic low of 3.92%….” With rates like those, the WSJ wrote, “Low interest rates are spurring more older affluent Americans to consider a mortgage.”

You don’t have to be in the jumbo market to seize the financial advantages this winter’s favorable real estate climate offers. Just call me!