Google “U.S. housing market”, and you will find quite a bit of news about a market that is still recovering; a market in which buyers and sellers can only predict an uncertain future. Indeed, if you do some research, you might find that in many places prices are flat and sales are dropping. However, not everyone is experiencing the consequences. According to the LA Times, the number of Southern California homes bought for $2 million or more in recent months is the highest on record – luxury real estate sales are climbing.
“It’s pretty mind-blowing, to be honest,” said Cindy Ambuhel, an agent at a Brentwood firm. “The luxury market has been completely on fire.”
The recent data reflects a housing market that is moving at two speeds, with high end real estate at the front of sales. “It’s just a completely different story between the two segments of the market,” said senior economist Selma Hepp. “Those who are doing well are doing really well.”
What exactly is causing the demand? Contributing factors include low interest rates, a strong stock market and interest from buyers abroad.
Agent Drew Fenton of Beverly Hills suggested that the biggest influence on the luxury market was the fact that the world, in a sense, is smaller now. “Everything’s just more global now,” he said. Ten years ago, “It was much harder to reach those people and they didn’t travel as much.” Wealthy international buyers now find it easier to travel the world in an effort to buy second homes and investment properties.
Southern California is especially appealing to buyers for the weather, glamour, and diverse population. Said a broker from Santa Monica, “We talk to private wealth managers around the world who think California is a very good market right now. Compared to New York or London, L.A. real estate is a bargain.”
Foreign interest, however, is only a part of the story.
Domestic buyers, too, are dealing with lower interest rates, cheap mortgages, and better terms with banks. Even more, wealthier households have seen their incomes grow faster than average in the recent years.
In response, builders have begun developments with high-end buyers in mind, and sales have been brisk.
It also seems that luxury buyers are getting younger and younger. Tech entrepreneurs and other wealthy shoppers in their 20s and 30s are gradually replacing baby boomers. “You’ve got 70 million baby boomers. You also have 70 million Gen Yers. They are a huge part of our buyer pool. It’s a market we have to pay attention to,” said Ambuehl.
But aside from the financial aspect of buying a home, what is the appeal? What defines “luxury” in today’s real estate market?
More than just a beautiful place to live, luxury homes tend to cater to the lifestyles of their residents. Luxury real estate experts are all about creating unique, customized spaces. Luxury homes are also smarter. High-tech features of today’s luxury homes include temperature-controlled wine cellars, motion detectors, and remote controls for virtually everything.
If you’re interested in luxury real estate, high-end homes can be found in virtually every region of California. However, Southern California is a top pick for good reason. Some of the most luxurious neighborhoods include Beverly Hills, Rancho Santa Fe, Malibu, Newport Beach, and Huntington Beach.