Smaller and new are the prevailing trends in luxury homes
Tuesday, August 06, 2019
Changing customer lifestyles and preferences are realigning the market for luxury homes. Sales are declining in some areas long considered to be havens for the wealthy and are rising in desirable suburbs and city centers.
As younger, affluent buyers and relocating baby boomers opt for simplicity and convenience over opulence, the demand for smaller and new, move-in-ready homes is growing.
In the second quarter of this year, sales of luxury homes increased somewhat compared to the previous quarter but remain well below those of last year.
According to the Institute for Luxury Home Marketing, total sales of all luxury residential properties in the U.S. and Canada dropped by 348 units in June as compared with May. The median list price was up $15,000, but the median actual sales price decreased by $28,000.
Web-based real estate brokerage Redfin reports that in the 1,000 U.S. cities it tracks, sales of homes priced at $1.5 million or higher declined in the second quarter by 4.6% year-over-year. The average sales price among those cities rose by 1% during the quarter, following a 1.7% drop in the first quarter.
Demand for luxury homes varies widely among traditional markets as buyer needs and attitudes toward luxury change. In high-tech, high-growth hubs with a lot of new money, such as San Francisco, Silicon Valley and Portland, competition for housing is keeping prices and demand high. Other top markets include so-called second-tier cities, such as Nashville and Denver, considered by younger buyers wanting an alternative to mega-urban living to be highly livable and a good value.
Also highly sought-after are new luxury condos in downtown cores, which appeal to those preferring a live/work/play lifestyle and to downsizing boomers wanting to keep active in retirement.
Real estate news portal The Real Deal relates that while sales of homes priced at over $1 million in the Chicago metro area were down 11% year-over-year in the second quarter (up from a 22% decline in the first quarter), sales were up for "uber-luxury" condos priced at around $4 million. Sarasota magazine cites a report that local sales of properties priced at $3 million or more in the first quarter nearly matched those of all of 2018, including luxury penthouses and bayfront homes.
In growing numbers, buyers are moving away from large luxury estates and seeking smaller, new, move-in-ready homes or condos with integrated smart technologies and luxury amenities.
In an interview with the Paradise Valley, Arizona, Independent, local real estate agent Greg Hague said he’s seen a notable shift away from multi-acre mansions to smaller, more manageable patio-style homes. "People want all the amenities, no maintenance, fresh and brand new,” he added. “And they are willing to pay top dollar for it."
"Bigger is not always better," says Anthony Cutugno, with luxury real estate brokerage Houlihan Lawrence, speaking with The Daily Voice.
Sales of luxury homes in Westchester County, New York; Greenwich, Connecticut; and similar communities that feature large estates have declined for three quarters in a row and are down notably from a year ago, according to the firm’s most recent sales report. Markets also have softened in New York City, the Hamptons and Miami.
Cutugno also is seeing the trend toward smaller and new. "Renovating or restoring a period home is the desire of a scant few," he says. "Though this shift is in its early stages, its impact is tangible."
Clearly, this trend has implications for residential designers, who could experience lessening demand for their services as wealthy buyers seek to avoid upgrading and renovating existing luxury properties and choose to buy new.
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