It used to be that a one-million dollar home was considered a very high-end luxury home. Well, in some markets that’s not the case.
"That’s no longer the home of an affluent person. Unfortunately because of price inflation and such -- people’s homes are now worth that much money, but their incomes may not be keeping pace," says Sharon Delaney, VP of Marketing for Coldwell Banker Real Estate, LLC.
Depending on the market, homeowners are finding their homes have reached the one-million mark, but sometimes, as Delaney points out, their salaries don’t keep up -- which is why the real estate market in that price point is slowing, according to a Coldwell Banker survey of 300 luxury homeowners. The 2007 Coldwell Banker Previews International Luxury Survey polled US homeowners whose primary residence is valued at more than $1 million ($2 million for California residents because the median home price in California is $562,380), according to the California Association of Realtors, compared with the national median home price of $223,000 as of April 2006 according to the National Association of Realtors.
"The thing that we have seen is that for the upper-priced homes, historically, they’re very insulated from mortgage rates and from the economic factors. These people are drawing from other pools of money and they just want to have their fun lifestyle. This year, for the first year, we are starting to see an impact in the homes in the $1 to $2 million range," says Delaney.
But if your home is worth several million or you’re looking to purchase a mansion, you may be in luck. The survey reveals that this price-point market is still moving along just fine.
What’s important for luxury home consumers is, of course, very different from the typical residential home. The study revealed that items such as heated floors, boat docks, bedroom kitchen, indoor pools, and tennis courts and golf courses top the list of items that those surveyed either already have or are considering adding to their luxury homes.
"Heated floors came up at 21 percent as things they’re going to add and tennis courts came in at 19 percent," says Delaney. She adds, "For the affluent consumer the most precious commodity is time. They don’t want to have to go home at the end of the day, grab their gym bags and schlep 20 minutes to get to their gym or tennis club," explains Delaney.
An interesting differentiating point in the survey was the way women and men responded. A total of 56 percent of survey respondents think the value of their homes will increase at least somewhat, while 10 percent expect to see a significant increase during the next 12 months.
"Women particularly were far more bullish on the luxury market than the men were that owned homes in this category," says Delaney.
She points out that 22 percent of the real estate in this country is sold to single women. And it seems the women in this recent survey appear to be optimistic when it comes to the luxury-home market.
The survey indicates that of the women respondents, 61 percent expect the value of their home to increase somewhat over the next 12 months compared to 50 percent of the men respondents.
Even so, overall luxury homeowners indicate that they are so positive about the real estate market that 40 percent of the respondents are considering purchasing a home in the next year as a secondary residence for family use. The survey shows that 38 percent may purchase an investment property and 22 percent are interested in purchasing a retirement property.
