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National Luxury News

Luxury Real Estate Trends for 2008, Part 1

2008,Looking Forward: Key Market Trends for Luxury Housing

1. The number of wealthy will grow and the rich will be richer than ever.

There’s no end in sight for the luxury housing market thanks to demand driven by demographics. Short of a serious recession or terrible terrorist event, you can expect the very top of the luxury home market to keep humming along in 2008 in most U.S. markets.

There will be continued softening at the entry levels of the upper-tier where many aspirational affluents stretched to buy homes they really couldn’t afford. But, activity should remain healthy at the top of the market. Nevertheless, expect some communities (Asheville, Charlotte, Manhattan, Austin) to outperform others (Miami, San Diego, Tampa, Detroit).

Key points: Target the luxury market segment, but recognize that real estate is a local business and you must analyze your market by price range to know where the hottest opportunities are. In many markets the market potential may be best at opposite ends of the spectrum—luxury and foreclosures.

2. Expect more cautious spending by the very rich and more focus on value.

The financial difficulties created by the securitization of mortgage loans (and not just the sub-prime ones) will be felt at all levels. The CDOs (collateralized debt obligations), SIVs (structured investment vehicles) and other “creative” forms of packaged mortgage loans have been bought by institutional buyers from municipalities to major banks, pension funds, etc. We are starting to see the results of mortgage defaults and the resulting losses surfacing around the world. Financial institutions are in the headlines today with reports of big write offs. Morgan Stanley’s $9.4 billion write-down at the end of December is one example. The news in 2008 will start to focus on the municipalities, pension funds and others who bought the new-fangled mortgage derivatives and are just now discovering the extent of their losses.

These headlines will create a more cautious investor, hit some wealthy directly in their pocketbooks, cause more turmoil in the banking/financial markets, somewhat moderate the luxury buying frenzy we’ve had over the last several years, and focus activity at the very top of the market. The wealthy will pay more attention to the long term investment potential of property than in the past several years.

We’ll still have big spenders—for instance, Russian billionaires will still complete for the longest yacht, most elaborate home, etc.—but, expect a bit more caution in the homebuying marketplace. Lifestyle desires and unique property features will still be the biggest influences on a luxury home purchase; however, buyers will also look more carefully for perceived value and safety of investment.

Key points: Recognize that even though a luxury home is an emotional purchase, you may also be called upon to explain why it is a smart long term investment as well as a great lifestyle choice for the buyer. Expect caution on the part of buyers, but remember the unique characteristics of the home and the lifestyle desires of buyers are still the big reasons for them to buy a residence.

© 2008 The Institute for Luxury Home Marketing, posted with permission from the Institute of Luxury Home Marketing

***Look for Part 2 of Luxury Real Estate Trends in the coming week.

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Go Ahead, Tear it Down

So, you have had your luxury home on the market for a year or so and have reduced the home by millions. No buyers have graced you with an offer, even though you think the house is a steal. What do you do? Most would take it off the market and wait for a sunnier day. But there night be another option….Tear the house down!

I never would have thought it possible, but those with money can do what they want. Case in point, look at Julio Iglesias, who has had his Miami luxury estate on the market for the last three years. Originally listed at $32 Million and reduced to $25 Million, Mr. Iglesias decided to take the 10,000 square foot home off the market and level it to the ground.

Having a larger family that has outgrown the current home, he has found it more beneficial to tear his mansion down and build a brand new one, which I am sure will cost millions. I can’t blame him. With 400 feet of waterfront in Florida, parting with four acres would be hard to do, not to mention the fact the finding the land in itself would be near impossible.

To read more of the article and see photos of the home, continue reading…

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$175 Million Sale Sets New US Record

Here is my recent press release:

The U. S. housing market overall may be suffering from the doldrums, but wealthy home buyers continue to invest in homes at the very top of the market. Evidence of the strength of the luxury home segment was revealed in late November with the sale of the Trinchera Ranch in Colorado for a record-setting $175 million. This sale breaks the U.S. residential sales record of $103 million set earlier this year in New York’s Hamptons.

By comparison, the most expensive property currently on the market in the Twin Cities is $53.5 Million, according to Jennifer Kirby, a real estate professional with Exit Realty Eden Prairie. “This property is certainly more affordable than the $165 million home in Los Angles that is the priciest listing in America today,” said Kirby.

Sellers of the Colorado property were the heirs of the late Malcolm Forbes, who acquired control of the historic Trinchera ranch in 1969. The buyer is billionaire hedge fund manager Louis Moore Bacon, who appears as number 286 on the Forbes list of the wealthiest Americans. Trinchera is the largest ranch in Colorado and its 171,400 acres contain five residences and a Western style lodge with 16 bedrooms.

Continue Reading…

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Home Invasion and What You Can do to Prevent It

The Wall Street Journal had an interesting article today about the increasing number of home invasions happening to affluent households. Take a look at a snippet of the article below and continue on to the entire post at the link at the end of this post.

Wave of Home Invasions Puts the Wealthy on Alert
By M.P. McQueen From The Wall Street Journal Online

In the past year, billionaire investors Warren Buffett and Ernest Rady, socialite Anne Bass and professional basketball players Eddy Curry and Antoine Walker all have joined a group to which they would rather not belong: victims of home invasion.

In affluent enclaves across the country, from Beverly Hills, Calif., to Scarsdale, N.Y., these high-profile cases and others — many of them unsolved — have set nerves on edge amid what law-enforcement officials and security experts say is becoming an alarming trend. One particularly gruesome case in July underscored the dangers for many, when a home invasion in Cheshire, Conn., ended in the deaths of a doctor’s wife and his two daughters. Two men have been arrested and charged in the case.

In home-invasion robberies — unlike burglaries — thieves hope to confront the occupants, often intending to force victims to open a safe or divulge bank-card PIN numbers. Home invasions aren’t separately tallied by the Federal Bureau of Investigation or by most state and local police. According to the most recent FBI data, residential robberies, which include home invasions, rose nearly 13% in 2006 from 2002, even as violent crime overall decreased 0.4%. Last year, 64,000 residential robberies were reported.

Experts believe home invasions are underreported. Security experts who serve high-profile clients say their clients often don’t report attempted robberies to the police because of privacy concerns. And local law-enforcement agencies only keep track of incidents within their jurisdictions, making it difficult to establish a national picture for these crimes.

Continue reading the complete article at the Real Estate Journal.

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Most Expensive Luxury Home

If you are fan of the Godfather movie, then you should recognise this home in an instant. It is the home of the famous “horse head in the bed” scene. A beautiful mansion located in Beverly Hill, Californian, it is also for sale, at a record list price of $165 Million.

Originally built for Milton Getz of Union Bank and Trust in 1926, the home was designed by renowned architect Gordon Kaufmann in the Mediterranean style. An expansive addition in excess of 20,000 square feet was completed in 1992 . Another famous person attached to the home is William Randolf Hearst, the infamous newspaper tycoon. This luxury estate has six buildings, three swimming pools,and a movie theater, all nestled on over 6 acres of prime real estate. With over 72,000 square feet, I think you could easily get lost trying to view all the rooms. There are 29 bedrooms and 40 bathrooms!

The property is listed with Westside Estate Agency in Malibu, California.

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Luxury Comes in All Forms

Recycling is a good thing, especially when you can make something old new again. But I never thought about taking something negative, like a jail, and turning it into something positive.

Such is the case for old Charles Street Jail in Boston. It has just undergone a five year, $150 Million revamp, and become the Liberty Hotel. The high-end hotel is banking that it’s history will be a big draw, which it will have to be if you want to stay there. A one night stay is reported to cost as least $319 dollars, and if you want the luxurious Presidential Suite, then expect to pay over $5000 for the pleasure.

Architects went all out on keeping as much of the 150 year old building in tact as they could. One restaurant, Clink, has windows with original bars which diners can look out of, and the hotel bar, Alibi, is located in the original drunk tank. Hmmm….the irony. Built out of granite, the jail was designed in the shape of a cross. The 90 foot tall central corridor is pictured above and once was used by guards who walked the catwalks, keeping prisoners in check. Like any building, it fell into despair and was finally closed.

The new Liberty Hotel has a new tower which houses most of the rooms, but 18 of them are in original cells. I bet those will be requested the most. People just love to experience the abnormal!

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Top Million Dollar Homes

Minnesota has nothing on some of the most expensive homes listed for sale in the States. Our highest priced home is currently just over $14 Million on Lake Minnetonka. Want to see just how over-the-top some of these homes are? Well, I will be highlighting some of the top Million dollar homes for sale over the next few weeks to show you just how extravagant the luxury market can be.

The Fleur de Lys


Located in Los Angeles, California, this estate is listed for sale by Suzanne Saperstein (the now ex-wife of David Saperstein, founder of Metro Networks.) for a price of $125 Million. The Sapersteins had it built in 2000. Due to their love for all things French, they wanted a home that was a near replica of the Vaux le Vicomte, the 17th-century palace of Louis XIV’s finance minister, Nicolas Fouquet.

Want some of the details?

  • 41,000 square feet

  • 100 person ballroom

  • gold leaf moldings

  • 3/4 mile jogging path

  • sits on rollers in case of earthquake

So if you love French architecture, make an offer on this home and be the buyer who breaks the record for most expensive home sold.

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One of a Kind Auction You Don’t Want to Miss

Here in the United States, the word Chippendale brings up a picture of men dancing around and taking their clothes off. But to those of us that appreciate design and antiques, Chippendale is something we would love to find at an estate sale (that nobody else knows about) and pick it up for a steal. I have yet to have this happen and wish I could find a chair in my attic like a gentleman did on the Antiques Road Show.

So for those of you who know Thomas Chippendale and the furniture he designed in the mid 1700s, you might like to know that the Dumfries House in Scottland, which was furnished by Mr. Chippendale, will be going up for auction July 12-13 in London with Christie’s Auction House. The lot is the only surviving documented commission of his Rococo furniture.

According to Christie’s website, “Dumfries House was commissioned by the Fifth Earl of Dumfries in 1748 and built between 1754 – 1757 by Robert Adam and his brothers John and James.In 1759, almost certainly on Adam’s recommendation, Lord Dumfries visited Chippendale and Rannie’s workshop in St. Martin’s Lane, London. The resulting commission was the most important of Chippendale’s Director period”.

The grand house has been mostly untouched for 250 years and barely lived in, as the family lived in other areas of the country. The current owner, the seventh Marquess of Bute, is the family member auctioning off the contents. You Formula One racing fans might know him better as John Crichton-Stuart.

From the website it looks like there will be over 600 lots up for sale which you can view at the on-line catalogue. Additional works by William Mathie and Alexander Peter, will also be up for sale. If you decide to bid and win, having it shipped back to Minnesota, please invite me over for a look as I would love to view a piece of history!

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Could You be Charmed?

“Charm Price” Psychology in Residential Real Estate

What does a list price of $1,299,950 say to a potential buyer?

Americans are famous for their tendency to attach a $99.99 price tag to a product, rather than $100.00. This retail strategy—reducing an item’s price by a few dollars or cents to make an item seem less expensive—is known as “charm pricing.” The idea is that an item priced at $895 may appear to be more a bargain to consumers than one priced at $900.

The Real Estate Center at Texas A&M University reported the results of a recent study of this pricing strategy, as used in real estate, in the January 2007 issue of Tierra Grande magazine. For instance, what are the results of listing a home at $1,299,950 rather than $1,300,000?

The research was conducted by Marcus Allen, of Florida Atlantic University, and William Dare, of Oklahoma State University. Using a large sample of home sales in the Fort Lauderdale metro area, they discovered that when charm pricing was used, homes tended to sell closer to the listed price than did homes offered at a rounded price.

The two concluded that a seller who uses charm pricing is communicating that the listing price is close to the lowest amount he or she will accept. The seller appears to indicate that the price is fixed and that there’s little room for bargaining.

“On the other hand, sellers who list homes with a rounded price seem to be indicating there is room for bargaining,” says Jack Harris, Ph.D., who monitors national real estate research for the Real Estate Center at Texas A&M.

It appears that the psychology of charm pricing, used by retailers for decades, may also work with high priced items like homes.

(article by Laurie Moore-Moore, founder of the Institute of Luxury Home Marketing)

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You Might Want to Add This New Trend

Fire Sprinkler Systems in the Luxury Home

A new home trend that is still an idea in most peoples minds, but sure to become the future norm, is the home fire sprinkler system. We all know that commercial properties and apartments buildings are required by law to have an operating sprinkler system, but apparently there is a push to have future homes equipped with them as well.

I have some insider knowledge as my husband works for Northstar Fire Protection in Eagan, MN as a Project Manager. He designs and oversees the installation of commercial sprinkler systems. One day last year we were talking about a project he was handling in Las Vegas and our conversation turned toward real estate. He mentioned that he had the feeling sprinkler systems would one day be required in residential homes. I laughed it off at first, but as we talked further about government regulations, lobbying groups, and insurance companies, I realized that he had a great point. A Decade ago, groups successfully lobbied to have airbags installed in every vehicle, so what is to stop them from lobbying the government to require the installation of a sprinkler system in every home? It is a safety factor after all, and the government loves to regulate our safety.

While doing some research into the topic, I came across the Home Fire Sprinkler Coalition, a nonprofit group who’s goal is to educate the public on the benefits of the home sprinkler system. I gained some valuable insight from a survey they did in late 2005. Here are some interesting facts from them, and my husband:

  • Each sprinkler is individually activated by heat, so a localized fire in one room will be the only room affected by water disbursement (less water damage to personal items).
  • A home sprinkler system is estimated to add 1-1.5% of the total building cost to new construction. On a $300,000 home, that is roughly $3000.
  • Sprinkler heads can be recessed into the ceiling and concealed from view.
  • Smoke and toxic fumes are greatly reduced by quick sprinkler response and might even put out the fire before the fire department arrives on the scene.
  • About 69% of homeowners believe a fire protection system adds value to their home.
  • Sprinkler systems will most likely lower insurance premiums. For example, State Farm offers its customers with sprinkler systems a 5-10% discount off the premium.

While huge luxury homes with 4000 square feet or more would greatly benefit from an in-house sprinkler system, homes of 1200 square feet might not feel the need for installation. Some city codes require homes with three above ground levels install a sprinkler system on the third floor, especially if you are converting attic space into finished square feet, example being a Queen Anne Victorian historic home.

If you are thinking of installing a system into your new home, make sure to use a professional fire sprinkler company. Most states require the work to be completed by a licensed contractor.
Don’t get me wrong, the availability of a sprinkler system is a great home option. It not only can save lives, but it can also reduce substantial insurance claims against loss. We plan on building a new home in the future and will definitely install a fire sprinkler system. I just hope installation never becomes mandated by the government.

Has anyone installed a sprinkler system into their home, or have you seen it in the marketplace?

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