The Institute for Luxury Home Marketing partnered with Altos Research on its latest webinar "How's the (Luxury) Market?" The webinar included speakers Laurie Moore-Moore, CEO, ILHM and Scott Sambucci, COO, Altos Research. The overall theme of the webinar: The luxury market is faring better than other markets nationally.
The luxury index in key areas such as Miami and Las Vegas were highlighted. Year-over-year prices were down in Las Vegas but less volatile compared to national levels. Miami fared better with positive growth. By comparing the S&P 500 to Tiffany's and Nordstrom's, its apparent the luxury segment is doing well.
Other good news: The amount of millionaires in the U.S. is back to pre-crunch levels. Before 2007, there were 9.2 million millionaires in the U.S. This number dropped 27 percent in 2008 to 6.7 millionaires. The number of millionaires rose 16 percent to 7.8 million in 2009; 8 percent to 8.4 million in 2010 and now there are 9 million-plus millionaires in the country. ILHM and Altos also looked at the "strained affluent" group of millionaires. They consider this a group of individuals who make a lot of money but need to maintain a certain lifestyle. According to the webinar, this group fueled the entry level luxury home market. They may also be the reason for foreclosures and short sales.
Cash is an important aspect to the luxury market and it looks like more cash is infiltrating this segment. "Cash is always king and there's a lot more cash going into the luxury housing market," says Moore-Moore. In Miami alone, 62 percent of $2 million homes were cash transactions in July. In addition, the number of million dollar home sales in 20 markets increased 18.6 percent in 2010 according to DataQuick data shared in the webinar. California saw a 21 percent increase.
Luxury home sales are happening around the country despite appearances. Moore-Moore highlighted examples of million dollar home sales that have created local records: $100 million home sale to Russian billionaire in Los Altos; $85 million home sale to heiress in Los Angeles.
A major component of a positive luxury home market is the international buyer, even in areas like Lincoln, Neb., says Moore-Moore. "They view the U.S. on sale because of currency issues," Moore-Moore adds. In addition, international buyers are looking to the U.S. because they want trophy properties; want to buy a place for their children to live while attend advanced degrees, or a place to stay when they visit their children; investment opportunities; safety; lifestyle and taxes.
With the economic slowdown, there has been a shift in attitudes among the luxury consumer. There is now more focus on value, quality and artisanship. The luxury consumer wants the best not just the shiniest product. As a custom home professional, it's important to sell the story of the luxury product to get the luxury consumer to make a purchase; explain why it's a well-crafted product. Moore-Moore says the Restoration Hardware resource book is a good example of how to do this correctly.
Do the results from this webinar make you feel more or less positive that luxury consumers are going to spend more money in the housing market?