Do you consider yourself to be a member of the luxury real estate market, either as a seller or a buyer?
Yesterday I took a CE course about the luxury homes market. Some of the info was informative with beneficial discussion. Other info is probably out-of-date since it was based on the 2000 Census Data. A lot has changed since 2000 so I didn’t include that info here!
What constitutes a “luxury” home?
That’s going to vary market to market. Here in central Ohio, the CE class decided that homes priced over $500,000 generally offer the amenities requested by the luxury buyer. What are some of the requested amenities?
- Media rooms. Locally, in new builds, more are being added to the 2nd floor rather than in the lower level.
- Multiple garages. At minimum, the home should have a 3-car garage, but as the price increases, more garages are expected.
- Offices. Rooms devoted to office space is becoming increasingly important. Some buyers want three office/computer rooms – his, hers, and the kids.
- High-tech wiring. Connectivity wiring for high-speed internet, control of security system – heating/cooling – lighting .
- Elaborate kitchens. High-end appliances, with multiple ovens, refrigerated & warming drawers, wine coolers, select water dispensers, and upscale counters.
- Pool/spa. Nationally a pool or spa is high on the list. The class debated whether this feature was high on the list for central Ohio.
- Street view. The class added this one. Buyers want the home to look “large” from the street. Thus, a home that is deeper but narrower is not as desired as one that is less deep but wider.
How big is the luxury market in central Ohio?
I checked the MLS system to see how many single-family luxury homes have been sold or are for sale in Franklin and Delaware counties.
Homes SOLD Jan 1 thru Jun 18, 2010
| County |
$500-$999 |
$1 million-$2 million |
$2 million-$3 million |
$3 million up |
| Franklin |
3265 |
377 |
31 |
1 |
| Delaware |
1976 |
138 |
4 |
1 |
Homes FOR SALE currently priced over $500,000
| County |
ACTIVE LISTINGS |
IN-CONTRACT LISTINGS |
HIGHEST PRICE |
HIGHEST PRICE SIZE |
| Franklin |
83 |
5 |
$4.7 mill |
13,192 sq ft |
| Delaware |
64 |
5 |
$6.8 mill |
14,256 sq ft |
Where are the luxury homes in central Ohio?
By school district, Plain Local (New Albany) has 36 homes currently for sale over $1,000,000, with Olentangy close behind with 35 such homes. Dublin is next with 25 homes, mostly in the golf communities of Tartan Fields and Muirfield. Upper Arlington has 16 such homes. In the Columbus school district, there are 10 homes, all located in German Village, south of downtown. Other districts with 1-9 homes are: Gahanna Jeff (8), Big Walnut (6), Westerville (4), Hilliard (3), and Buckeye Valley (3).
Who is the luxury buyer?
Generally, Baby Boomers (age 44-65) is the largest segment of the luxury market. They are entering the “empty nest” phase of their lives. They are spending less on needs-driven purchases and more or personal luxuries. They are seeking quality of life and security.
Luxury buyers should expect to be required to show proof of a pre-approval letter from a lender or proof of funds prior to viewing some of these homes. This protects the seller’s home and possessions from potential scammers/thieves and ensures the showings are to serious buyers only. It’s the world we now live in unfortunately.
What’s the future hold?
While the entire nationwide real estate market suffered in 2008-2009 due to problems in the financial and employment sectors, the luxury market has had its own share of issues. Notably after the subprime melt-down, the rates for jumbo loans increased to over 8%. The new rules required high credit scores and 25-30% down. The rates now are generally down below 6%, but the other rules are still in effect. Prices have come down substantially on million-plus dollar homes, which when combined with the lower interest rates, is helping to move these homes in 2010.
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Here’s some encouraging news early in 2010. Last year, we had trouble moving the housing inventory priced over $300,000. The 1st Time Buyer Tax Credit favored homes priced below $200,000. Many of those lower priced homes were owned by the banks (REO) so when they sold, there was no trickle-up benefiting the higher priced homes. It was a tough year for sellers who had upscale homes.
