Blog contributions are provided exclusively from Luxury Real Estate members throughout the world.
It's hard to believe that we are already approaching the holiday season and the end of 2013. It has been an excellent year thus far and I think an important transitional year for the market. We are no longer experiencing the frenzy that defined the first half of the year and it seems that prices and inventory levels may be starting to level out. The California Association of Realtors released a report forecasting that home sales will rise 3.2% in 2014 as "price gains moderate and the inventory crunch loosens" (LA Times).
In the luxury market, Beverly Hills (along with NY Upper West Side) has had the most homes sales over $10 million. There were 18 sales over $10 million in Beverly Hills through June (Bloomberg). We are looking forward to continuing that trend as the luxury market in Beverly Hills and neighboring areas remains in strong demand especially among International buyers.
This week I asked Warburg agents what they are experiencing in the New York real estate marketplace. While the replies varied somewhat, several major themes emerged which are both interesting and surprising. Here are the highlights:
• While in the first days the government shutdown did not seem to be making a difference, it has now begun to drag on the market. Uncertainty is always the enemy of action; people making big decisions want to feel confident about the future. The concern in the business community about the end of the Bloomberg era and the likelihood of a DeBlasio mayoralty exacerbates that sense of uncertainty. In such an environment buyers often hold back.
• Competitive bidding is still taking place for select properties. For this to occur, the three major factors: location, condition, and price, all need to be aligned. Just this past week-end a mint 1550 square foot property on the Upper West Side received 24 bids! It was priced right, in a great location, and completely renovated. Price and condition are particularly important, especially in Manhattan. In Brooklyn the supply/demand ratio is still so tilted towards demand that almost everything sells with multiple offers.
• Priced right, properties move fast. If the property is priced wrong, especially in the co-op market, it is likely to sit. All too many sellers read descriptions about penthouse sales in new condominiums and believe that information applies to their older co-ops as well. In fact the two markets are following very different trajectories. The high end co-op market remains stagnant, with numerous overpriced properties lingering on the market for months or even years. Often even price reductions fail to re-energize these properties after a long period on the market.
• High end sellers are often content to sit it out. With the enormous appreciations in real estate values in recent years, and the new tax laws which translate into paying the Federal, state, and city governments close to 35% of the capital gain, there is less financial incentive to sell a large, highly appreciated property. This contributes to the shortage of viable inventory in the marketplace.
• Buyer behavior is increasingly unpredictable. Often they will rush to bid high in a best and final, only to have second thoughts after succeeding and back out. One of our agents has had this experience with each of her three new exclusives: the high bidder backed out after a deal was struck and the property sold to the second or third in line. Other buyers are simply more hesitant or have more of a wait and see attitude. Still others know there is little inventory but are baffled and frustrated because when they analyze recent comparable sales they find current prices unreasonable, even as other buyers are paying them.
• Co-op Boards have displayed high expectations during 2013. Many buyers, even those with high income, do not have the sort of assets Boards want to see in a purchaser. These buyers, who often cannot afford the new condos which are priced at least 20% higher than co-ops or older condos, end up with very limited options.
• Many sellers are not negotiable, and certain properties ARE selling at 15% or even 20% above comparable sales from a year ago. The rapid price escalations during the first eight months of 2013 thus make it hard for buyers (and sometimes brokers!) to keep up with the market.
• The busiest market remains that for properties priced at $2,000,000 and under. Excess inventory which existed earlier in the year has been absorbed, and Warburg agents dealing with these properties report that inventory is low and well-priced one and two bedrooms in good condition move very fast. Often the buyers for these units have already lost one or two apartments by not offering enough; after a few losses they become more determined and aggressive in their bidding. At the beginning of the year we were advising buyers to go 5% over ask when bidding in a best and final situation. By May we were advising 10%. In the last two weeks we have had two buyers go between 15% and 20% above the asking price and STILL not succeed.
• The condo market south of the mid-60s has a life of its own. Foreign buyers, especially from the Chinese mainland and Taiwan but including Europeans, Brazilians, Russians and Koreans, seek mid-priced investment properties in both new and established buildings. The supply of foreign money seems inexhaustible.
• Open Houses in the under $2,000,000 price range are thronging with brokerless buyers. These buyers are rarely knowledgeable or strategic enough to be successful in competitive bidding situations.
Today’s market displays complexities which are unique in my memory. Neighborhood, property type, price range, condition, time on market all combine to render each transaction unlike the one before. Buyers and sellers need both careful analysis AND bold behavior to achieve their objectives. And, like never before, they need a skilled agent to help them navigate this fast-paced and multi-layered environment!
You can read more on the Warburg Blog.
Courtesy of The Dawn Thomas Team
If you’re thinking about buying a home your credit score is a crucial piece of the puzzle. Most people assume their credit scores don’t change much in a year or so but that’s not always the case. Having your most current and accurate credit score is essential for the home buying process!
“If you’re in the market for a house, you might find the home-buying process complicated by one little number: your credit score. Whether you like it or not, the most important financial decisions of your life are affected by your credit rating, so it doesn’t hurt to be prepared well in advance. As home prices continue to rise, some sellers are re-entering the market, but if you don’t educate yourself about the importance of improving your credit score before you get too far along in the process, you could see your dream home slip out of your fingers.
Stricter standards are now being used when it comes to mortgage loans, so make improving your credit score one of the first items to check off on a to-do list as you begin the home-buying process.
So how exactly is your credit score determined? The number is created by credit bureaus so that lenders have an idea of whether or not you have responsibly managed your financial obligations. Your payment history, total amount owed, length of credit history, types of credit used, and new credit accounts are all important factors that impact your score. The higher your score, the less of a financial risk you pose to potential creditors. A FICO score – the most-common type of credit score lenders use, ranges between 350 and 850. A good score ranges from 680-729 while a great score is around 730-799. Above 800 is considered excellent.
When it comes to dealing with your finances, keep these tips in mind so that your credit score improves:
If you want to obtain your credit score, there are three major credit bureaus: Experian, TransUnion, and Equifax that you can work with. You also can receive one free credit report per bureau (does not include your credit score, which is an additional cost) annually at http://annualcreditreport.com.
*ARTICLE BY JEANETTE BROWN
The recession changed my thinking, for a while. After years of expanding Warburg Realty and trying to enter new markets, I had to pull back. I closed two of my offices in early 2009, leaving the firm with three. I had to let a number of employees go. Because I acted fast, we did not suffer much financial fallout. Our base was steady and, when the recovery began for real estate in April or May of that year, we were poised to take advantage of it. Most of the city’s other high end firms had a similar experience. We were careful, we weren’t overextended, we had reserves, we did just fine. But it made a big impression.
I bought Albert Ashforth’s Manhattan residential division and created Warburg Realty at the end of the last big recession, in 1991. I was thirty nine years old, and scared. Here I was committing capital and career to a proposition that, if 1989 and 1990 were any indication, could leave the company in negative financial territory in no time. But it didn’t happen. Every year we grew our profitability, starting with 1991. So that too changed my thinking. I saw that taking risk was necessary, that nothing good is built without putting your beliefs on the line. We put together a management team which tried to stretch, in terms of technology, in terms of the boundaries of the sales world in Manhattan, in terms of our commitment to core principals of integrity and respect in all our interactions.
After the 2009 recession, I needed to sit still. My belief in the system, and real estate’s place in it, was shaken. Even as the market improved throughout the second half of 2009 and 2010, I held to the status quo. Not too much change! Not too much risk! I needed to know that our national economic ship would continue to right itself.
About a year ago, I remembered what I had learned in 1991. There is no reward without risk. So we moved our flagship office from its rather tired quarters at 969 Madison Avenue to our new space at 654 Madison, which I love. We took advantage of our terrific, reliable IT department to update our website and begin work on our new Warburg iPad app, launched last week. We are adding desks at our Tribeca office and looking for new opportunities in other parts of the city. We have just hired exciting new PR counsel and we are retooling our marketing. Our core values remain the same, but a lot of things are changing.
Every year, our management team members review each other. In my review this year, my colleagues were evenly divided between “Excellent”, “Good” and “Fair” regarding my enthusiasm about change. And they are right. My relationship to change is complex. I have been married to the same woman and living in the same apartment for 36 years. When something works, I don’t want to mess with it. I feel comfortable when things stay the same.
I also know that in business, you are either moving ahead or falling behind. For three years, after I closed my offices, I wanted to regain my footing. The firm was in a holding pattern. Then suddenly, I stopped looking down and started looking out. Now every day I think – let’s do this! Let’s do that! I am excited and filled with energy about what’s next.
You can read more on www.warburgrealty.com/blog.
Courtesy of Coldwell Banker Previews International®
A new survey by Coldwell Banker Previews International® and the Luxury Institute finds that wealthy younger buyers are driving the luxury real estate market, and they are willing to pay more than similar wealthy buyers age 55 and older. According to the survey of Americans age 21 or older with a minimum gross annual household income of $250,000, 43 percent of younger wealthy consumers are considering the purchase of residential property in the next 12 months, compared to 21 percent of those age 55 and older. On average these younger wealthy consumers spent more than $2.1 million on their most recent purchase of residential property, approximately twice the average amount spent by older and similarly wealthy luxury buyers, which was $1.1 million.
“This trend towards younger luxury buyers is leading a change in desired home amenities,” said Betty Graham, president, Coldwell Banker Previews International NRT. “Whether these younger buyers have young families or are single without children, they are looking for homes that fit their active and unique lifestyle.”
More Young Money Enters the Real Estate Market
So what are they buying? The survey found:
· Younger buyers are significantly more likely than wealthy buyers age 55 and older to want homes with amenities such as a pool, outdoor kitchen, home gym, home theater, wine cellar and four or more garages.
· Wealthy consumers under age 55 are more than twice as likely (23 percent) to value Green or LEED certified residential properties than their older counterparts (11 percent).
· Open floor plans and a fully automated and “wired” home environment are the top features wealthy consumers, regardless of age, say have become important to them in the last three years. Less importance is placed on staff quarters, tennis/sports courts and separate catering kitchens.
“Luxury homes are for more than successful and retired empty nesters,” said Milton Pedraza, CEO of the Luxury Institute. “Today’s luxury buyer is both dynamic and diverse, and it’s reflected in the homes and products they’re buying.”
Additional Survey Findings
- They may jet set internationally, but they are buying in the U.S.
Only 6 percent of wealthy homeowners surveyed own residential property located outside the United States.
- For majority of luxury buyers, location is the most important factor when considering the purchase of residential property.
Seventy (70) percent of wealthy consumers identified location as the most important factor in their last residential purchase. Other elements included the condition of the property - brand new with no work required, as opposed to needing major renovations (10 percent), price (8 percent), home amenities (6 percent) and view (6 percent). The most commonly cited reason for wealthy consumers not considering the purchase of a residential property was the desire to keep assets liquid (24 percent).
- However, nearly one in four have the freedom to choose a property anywhere.
Overall, 22 percent of wealthy consumers, and 24 percent of wealthy consumers with a net worth of $2 million and greater, have more freedom to choose a residence that truly fits their lifestyle and will not limit their search based on location.
- The wealthier they are, the more they spend on real estate (by far).
On average, wealthy consumers with a gross annual household income of at least $400,000 spent 225 percent more on their most recently purchased residential property than those with incomes between $250,000 and $399,999 ($2.58 million vs. $792,000).
- Interest rates matter, even for the wealthy.
More than one in three (39 percent) wealthy consumers listed low interest rates as a reason for considering a residential real estate purchase, making it the most commonly cited motivation amongst wealthy consumers. Other frequently listed motivations were the desire to own a property in a specific location (35 percent), viewing the purchase of residential property as a good investment (32 percent) and the desire to own another residence (31 percent).
The full findings from the Coldwell Banker Previews International Wealthy Consumer Survey are available here .
Coldwell Banker Previews International® Luxury Market Report
In October, Coldwell Banker Previews International will release the brand’s Fall 2013 Luxury Market Report. The report will include information and findings from the Wealthy Consumer Survey in addition to rankings and descriptions of the hottest luxury real estate markets in the country and around the world. The Spring 2013 Coldwell Banker Previews International Luxury Market Report can be viewed at coldwellbankerpreviews.com.
The Luxury Institute, in partnership with Coldwell Banker Previews International®, conducted research on the topic of real estate during Quarter 3, 2013. This in-depth survey includes responses from 300 affluent male and female consumers in the United States. Respondents were recruited and screened to only include those age 21 or older with a minimum annual household income of $250,000.
About Coldwell Banker Previews International®
Previews® began as a luxury home brokerage founded by Henderson Talbot in 1933. The firm was acquired in 1980 by Coldwell Banker Real Estate LLC and re-launched as Coldwell Banker Previews International, the brand’s luxury homes program. The exclusive group of certified Previews® Property Specialists make up approximately 10 percent of the more than 82,000 Coldwell Banker sales associates worldwide. Coldwell Banker Previews International® participated in more than 16,400 transaction sides of homes priced at $1 million or more in 2012. On average, Previews handles $86.1 million in luxury homes sales every day. The website www.coldwellbankerpreviews.com features more than 17,000 luxury properties from around the globe. Coldwell Banker, Previews and Coldwell Banker Previews International are registered marks licensed to Coldwell Banker Real Estate LLC. Each office is independently owned and operated.
Courtesy of Koenig & Strey
Jennifer Mills, Aaron Share and The Home Discovery Team of the Koenig & Strey Webster Street office have sold over 50% of the units at new Bucktown property Hermitage Sixteen11 at pre-construction prices. Prices will increase on September 22, when the pre-construction sale expires. Construction on the Sedgwick Properties development has already begun.
“This project has been very well received by the brokerage community and buyers,” Mills said. “The units are one-of-a-kind in the Bucktown landscape and offer great value for the price. With pre-construction pricing ending on September 22 and some of the most popular floor plans still available, now is the time to buy!”
Exclusive features of the Sedgwick Development property include expansive floor plans, 10 foot ceilings, private elevator entrance to each unit, terrific private outdoor spaces in each unit and one parking space in the attached heated garage included. Additional details include hardwood floors, refined and modern finishes, in-unit laundry and lavish master suites. Hermitage Sixteen11 is conveniently located in the heart of Bucktown with quick access to public transportation and the Kennedy Expressway.
The remaining seven units are being represented by Jennifer Mills, Aaron Share and The Home Discovery Team and the current listings are available at www.hermitagesixteen11.com. Jennifer Mills can be reached at 773-914-4422 or firstname.lastname@example.org, and Aaron Share can be reached at 312-204-5077 or email@example.com.
Courtesy of The Dawn Thomas Team
So much has been made of the housing crisis and what has been left in the wake of the damage, but one of the most pertinent questions has been- what’s going to happen next? A lot of that has been figured out *think lenders having tighter guidelines, more cautious Buyers and Sellers, the dwindling ‘flipping’ market etc* but one thing that has recently come out is the best news for the Real Estate market here in the Silicon Valley and beyond: people still want to own homes and they still believe in the idea of homeownership!
Study Says Housing Crisis Did Not Damage Homeownership Perceptions, Source: DSNews.com
During the financial crisis, 4 million American homeowners lost their homes to foreclosure, and one-fourth of all mortgage-holders fell underwater on their loans. The decline in value of real estate attributed to the housing crisis led to a dramatic loss of wealth, as the fall in home prices wiped out more than $8 trillion in equity. But did these turn of events have a serious impact on how Americans view homeownership? Not according to a study by Harvard University’s Joint Center for Housing Studies, titled “Reexamining the Social Benefits of Homeownership After the Crisis.”
Making sense of the story
- The study concludes the impact of the housing crisis seems to have been short lived—even among those who have either direct or indirect experience with mortgage foreclosure. Furthermore, attitudes toward buying a home have rebounded at a remarkably fast pace.
- The evidence suggests that people seem to believe that in the long term owning a home is still preferable to renting, at least when it comes to the financial benefits of homeownership. Long term cultural preference for owning seems to remain intact despite the recent housing crisis.
- The Joint Center for Housing Studies states: “Our review of early research on the impacts of the housing crisis on attitudes toward homeownership suggests that no extraordinary efforts will be needed to attract American households back into the housing market.”
- Research indicates that attitudes toward homeownership as a financial investment have been steadily improving since the height of the housing crisis, although the attitudes of renters have been slower to rebound. The improvement in attitudes may be partially attributable to financial reforms and consumer safeguards.
- The study calls for additional research on how the housing crisis has impacted the perceived non-financial benefits of homeownership and the actual social impacts of homeownership in order to test the social benefits to both individuals and to society in light of the federal commitment and subsidy of homeownership.
Courtesy of RE/Max Island Properties
There are many great reasons to invest in St. Maarten. Learn more about investing in St. Maarten and what makes the country so unique in this educational YouTube video: http://luxre.com/u/65/.
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About RE/MAX Island Properties
The leading real estate agency on the island and lifestyle specialist is world renowned RE/MAX, whose global advice and expertise help investors make the right decisions and accommodate their requirements of property ownership.
At RE/MAX Island Properties, we don’t just sell properties, we create lifestyles! We know that buyers and sellers alike come to us trusting in the RE/MAX name and that buying real estate on our beautiful Caribbean island is often much more than a transaction…It is the fulfillment of a dream.
Courtesy of Summit Sotheby's International Realty
Buying real estate just after passing the bottom of the market can be one of the best times to buy property. Yes, if you missed the bottom of the market, you may have missed out on some of the best deals seen in a long, long time. But, when the market was at the bottom, nobody really knew it for sure. It was a time of major uncertainty. But now things are very different. We are in a phase of recovery, and pricing is ovine up, and as of now, it appears that it will continue to do so.
Below is a chart showing the natural cycle and trending of a real estate market. The chart shows the increase of a market to its peak, shown by point "A". We then see the downward trending of pricing all the way down to point "C", which is the absolute bottom of the market. Across the country, most markets are reporting that unit sales are up, and likewise, most markets are also showing increases in pricing. At this point, most Realtors® would agree we are probably at point "D", shown in the chart below.
Why Is This Considered To Be Such A Good Time To Buy Property?
We define point "D" as a good time to buy because it is a "Safe" time to buy property. Why? Because after the bottom of the market passes, we typically see a time period where sales activity increases strongly, and sales prices begin to rise with the renewed confidence in the market.
We can all remember back to a time in our market when pricing was dropping and dropping fast. At that time we were not sure how much longer the prices would continue to drop. Many of us Realtors knew we were getting close to the market bottom, and in some areas we speculated with some confidence that we were at the bottom of the market. But how could we truly say for sure? We couldn't - at least until we had the numbers to show we passed it.
At that time we saw a few sophisticated and educated buyers come into the market and they made some great buys at amazing prices. Whether smart or simply lucky, these buyers all had one thing in common. They took a calculated risk in a time of major uncertainty. For the buyers who purchased near the bottom, they are now being rewarded with the values of their property moving back up. For many people that were looking in the market back then, it was simply to uncertain, and viewed as too risky to make a purchase at the time.
Our Current Phase of the Real Estate Market Cycle
By reviewing many of the posts and statistical reports from across the nation, it appears that for most real estate markets, we can confidently say that we have passed the bottom of the market. It's been a long, long wait to hear that good news! For many buyers who were looking at property a couple years ago, or even just one year ago, it was just too uncertain and too risky for them to make a purchase. Buyers out looking today need to get over the fact that they may have missed out on a couple of incredible deals or steals. Sure they may pay a little more today, than what they could have bought for a year or two ago, but if they are looking to buy now, they can have a decent level of confidence in the market.
Today, the market is recovering. Today, the market has bumped up a little in price, but we still have a lot of room to go to get back to where we once were. Today, the activity is so strong in the market that there simply is no reason to expect prices to drop again. Today, looking at our chart above, we can say with confidence that we are indeed at point "D".
The Park City Utah Real Estate Market
In Park City Utah, we are currently at about a 10% overall increase in pricing according to the statistics reports provided by Park City Board of Realtors® and MLS. But we are still off the peak of the market pricing by about 29%, so we do have a way to go to get back to where we once were. For Park City, I would absolutely say that we are at point "D' in the above chart. We have passed the bottom, and we have had enough time to measure an increase in pricing for almost all areas and all market segments. From the top of the market which was at about late 2007/early 2008 for Park City, it has been about six years to trend down from the market peak to the market bottom. The million dollar question now is "how long do we think it will take to get to the next market peak?" Will it be another six years to go back up? And when we do go back up, will we surpass the numbers we saw at the last peak? Only time will tell!
If you have a particular area of interest, ask your local area expert Realtor to collect some data for you from their MLS. Together, you will be able to specifically evaluate where in the market your area of interest is. The best way to do that is with the help of a local Realtor who specializes in the area you are looking in. We are calling this timeframe a "safe" time to buy in a more generalized term, but check with your agent first. See what your Realtor has to say, they will be the expert for their market.
Simply put, this has been one of the best summers for luxury sales in Naples. Our firm alone has pended or closed more than $70m, including a record sale on the beach and a number of other impressive transactions. Buyers are buying, sellers are selling, and our firm can announce unequivocally that the Naples luxury real estate market is balanced. In certain cases, such as the beachfront, it is a seller's market. Further inland, there are still some excellent buyer opportunities.
Regardless of your need, it is critical that you consult with a realtor. There are a ton of off-market properties for sale; we have insight into both market values and motivations, so please contact us for a professional consult anytime.
Sense of Urgency Driving Hot Summer Sales
• Decreasing inventory, rising interest rates and home prices create urgency in Naples real estate market Condo pending sales comparing July 2012 with July 2013 show a 167% increase; Yes, 167% increase.
• Closed sales in the $2m+ market increased 33% when comparing last 12 months with 12 months prior.
• Port Royal, Aqualane Shores and Olde Naples all have about 6-month inventory of single-family homes remaining on the market, considered a healthy balance by GCIP and NAR standards for a community.
• Overall market increases in pending, closed sales, average sale price, reduced days on market and inventory.
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