Wealthy spending again on luxury homes
... Two home sales, each exceeding $45 million set U.S. records for 2010
In April, Texas Energy executive Kelcy Warren purchased a Colorado property for $46.5 million. Hot on the heels of this transaction, an un-named Indonesian buyer purchased a 48,000 square foot Bel-Air mansion for an amount reported to be close to $50 million in June. Although seller, Mohamed Hadid wouldn’t release the sale price, he confirmed that it was in excess of the previous record of more than $46.5 million set this spring in Colorado, falling between $50 million and the asking price of $72 million. In Los Angeles County, sale prices can take more than a month to appear on the public record. The Los Angeles sale will now set the newest record for this year’s priciest residential transaction. Some Realtors speculate that these transactions illustrate a return of the wealthy to the upper-tier housing market.
Laurie Moore-Moore, Founder of The Institute for Luxury Home Marketing – which trains agents in the luxury market and awards an international designation to the most successful –reports that, “Institute members from many markets across the country are telling us that buyers at the top of the market are looking again and that many are cash buyers. We believe this anecdotal evidence may herald the return of the very affluent to the national residential market.” But is this the case in our local market?
The upper tier market in Hot Springs is also experiencing an up-tick. Our local luxury market starts at $800,000 in Hot Springs. Inquiries and showings are up in the $800,000 and above market and that’s a good sign. What’s more, when our market was at its peak in 2006 and 2007 - there was an average of 12 luxury home sales per year in Hot Springs. In 2008, that number began to slide slightly to 9 luxury home sales with the largest sale in 2008 listed and sold by the Kennedy Team. Then the sales dropped significantly in 2009 to only 2 luxury home sales with the Kennedy Team selling the largest sale in 2009. As of June of 2010, there have already been 2 luxury home sales in the area with the largest sale this year sold by Rick Goff, Realtor/Owner of our firm, First Choice Realty. We believe this is a good sign of the market starting to pick back up. Many local upscale homes are such good values that smart buyers should reappear very soon.
“In the recent economic downturn, the wealthy experienced substantial drops in their portfolios and felt the uncertainty of global economic conditions, said Moore-Moore. “As a result, the luxury market shrank across all product and service categories, including housing. In addition, many wealthy converted investments to cash and have been watching and waiting on the investment sidelines. Today, many are looking at U.S. home values and deciding to buy another residence as both a lifestyle decision and a portfolio play. Although the current turmoil in global economies is a wild card which could change things, we think the luxury home buyer is re-entering many market and shopping for fabulous homes as smart investments.”
For more information regarding the luxury home market in Hot Springs, please feel free to give us a call.