October 2, 2014
A new report by Coldwell Banker found that areas adjacent to luxury hubs are benefiting from rising prices and dwindling inventory.
San Jose has seen luxury home sales rise 76 percent from the year-ago period, earning it a spot among the top five cities in the United States in terms of sales above $1 million. The report also explores the changing demographics that are fueling trends around the country.
"I expect the Los Angeles real estate to remain strong because, relatively speaking in comparison to cities such as London and Paris, it is still the most reasonable of the major cosmopolitan international cities," said Joyce Rey, Beverly Hills real estate agent with Coldwell Banker Previews International, Beverly Hills.
"LA also offers buyers a wonderful lifestyle, arts and cultural opportunities, the beauty of the natural environment, and incomparable weather," she said.
The "Luxury Market Real Estate Report Fall 2014" includes survey data from 506 U.S. consumers over the age of 21 with a net worth of at least $5 million and was conducted with the Luxury Institute.
The report notes that the tech industry is driving much of the "adjacency" surge on the West coast. Consumers incapable of finding a suitable home in markets like San Francisco and Silicon Valley are looking elsewhere.
Although San Jose is the third largest city in California and the tenth largest in the U.S., it has not traditionally been pegged as a chief benefactor of the tech boom, and has seen staggering growth.
Smaller places such as Atherton, CA, have received much of the spillover from larger markets. The small town saw sales in the $10 million dollar range double from the year-ago period.
Home listing in Atherton, CA
On the East coast, adjacency areas have emerged near Miami, where North Miami Beach made it among the top 20 cities for $10 million home sales.
While the wealthy are seeking out new areas, the expected cities have surged as well. For instance, the number of $1 million homes in San Francisco increased 57 percent from the year-ago period to reach 2,485.
Home listing in San Francisco
The top five cities for $10 million sales include New York, Beverly Hills, CA, Los Angeles, Miami Beach and Aspen, CO.
Forty-eight percent of respondents said that they plan to buy a luxury home within the next 12 months.
Among respondents under the age of 35, this number jumped to 81 percent. This demographic also reported the highest average purchase price at $7.8 million.
Seventy percent of female respondents reported paying all-cash for their most recent property, versus 57 percent of males.
Women also reported a greater likelihood of buying homes with price tags above $10 million. Twenty-two percent of women fell into this group, compared to 13 percent of men.
Interestingly, just 25 percent of consumers under the age of 35 cite location as a crucial factor when searching for a home. Among this cohort, lifestyle relevance was the chief consideration.
Eco-friendly homes and homes with safe rooms are two top priorities among respondents looking to buy.
"One of the most surprising findings was that among the wealthy group surveyed, the under 35 age group spent the highest amount on their last home, nearly 8 million dollars, in comparison to all other generations," Ms. Rey said
Joe McCarthy, staff writer on Luxury Daily, New York