The luxury home market is gaining momentum, with prices rising and many areas where upscale housing once struggled now turning into a seller’s market, according to the Institute for Luxury Home Marketing.
“Prices have been trending up fairly strongly since the beginning of the year,” Laurie Moore-Moore, the institute’s founder, recently told the Chicago Tribune. “Inventory has been tight, though we're starting to see a little growth in inventory again. It's not stock-market driven, not necessarily. When you look back at the housing-market downturn, the low point probably was in 2007. Typically, a downturn would be driven by high mortgage-interest rates, but this time it was the whole real estate market that crashed. And at that time, the number of wealthy people in America actually declined, and the number of wealthy households is an extremely important driver of demand.”
But by 2010, there were nearly as many wealthy households as before the downturn, with affluent households recovering fairly quickly, Moore-Moore says.
“This group focused on residential real estate as a pretty desirable asset — for them, a second or third home turned out to be a portfolio play,” Moore-Moore notes. “Driving the recovery, we've had record low interest rates and a perception of bargain prices and then we've had this very affluent group saying, maybe real estate is a smart buy.”
The high-end markets flourishing the most are Baltimore; Charlotte, N.C.; San Francisco; and Washington, D.C., according to a monthly analysis by the Altos Research data firm on behalf of the Luxury Home Marketing. The report tracks 31 ZIP codes with the highest median prices.
But not all luxury home markets are gaining momentum, according to the report. For example, some luxury markets are considered stable, including Atlanta, Los Angeles, Miami, Las Vegas, Denver, and Dallas. Also, luxury-home markets are still seeing prices fall in areas like Chicago, New York, Seattle, and Orlando.