A decline in America’s wealth
According to Laurie Moore, CEO of The Institute for Luxury Home Marketing, the Great Recession has not only reduced the number of wealthy, but changed attitudes and buyer behaviors.
Moore notes that, “In 2008, as a result of the economic downturn, the number of wealthy worldwide, as measured by High Net Worth Individuals (HNWI), declined by about 15%, falling from 10.1 million to 8.6 million. At the same time, the amount of wealth held by this group also declined from $40.7
trillion to $32.8 trillion, a drop of more than 19%.”
From 2008 to today
As a result, demand for luxury properties slowed in 2008 and many remaining wealth holders took a wait and see approach, deepening the sluggish demand, reports Moore. But today, Moore reports that “more wealthy households than before are fueling home buying demand.”
“Beginning as early as 2009, the number of wealthy worldwide and the amount of their wealth began to recover,” Moore added. “By 2011, there were 11 million HNWIs with $42 trillion in combined wealth and demand for luxury homes had risen again. In short, the post-recession affluent shifted into a home shopping mode. We have seen the results of new demand in 2012. Many markets have seen a rise in luxury home purchases (and in some cases, rising prices as well).”
A renewed buying attitude
Moore said this renewed buying attitude is most likely a result of lifestyle desires and the belief that residential real estate is a smart investment. Billionaire John Caudwell said, “Trophy (property) assets are probably the most resilient and successful investment options at the moment, and will be for the foreseeable future.”
“Caudwell’s quote illustrates the fact that investors feel that an economic turning point is ahead,” Moore said, “and properties purchased at today’s prices will be viewed in the future as smart buys.”
New attitudes of the wealthy
The vast majority of wealthy are business owners, self-employed professionals, and top corporate executives, and as luxury real estate demand has risen, attitudes of the wealthy have changed.
In Moore’s words, the following are the ten new attitudes of the affluent:
- Although there will always be “flamboyants” who gravitate to McMansions, in general, real estate “bling” is out and artisanship and quality are in. The demand for bigger has shifted to demand for better. Quality is a key purchase factor along with taste and design aesthetic.
- The majority say they prefer a low key lifestyle and don’t wish to be recognized and acknowledged as wealthy. They prefer the term “very successful” over rich or wealthy
- When buying, they look for future profitability, value, and the ability to exit easily. They also prefer buying near their affluent peers.
- They often don’t feel rich. Their view of their wealth is less about the number of zeros and more about how much richer others are. They may own a luxury vehicle, but be thinking, “My friends have a luxury car and full time driver.”
- They are increasingly global in their tastes, attitudes, and preferences.
- Their lifestyle has shifted from spending on things to spending on experiences. especially those that create their ability to tell a story.
- Home purchase decisions may be influenced by opportunities to add value by restoring, expanding, or making a profitable currency play. Some attitudes have stayed the same.
- They are early adopters of technology and are online. They will shop for a home first using the web. They will also research real estate professionals online.
- Their time is titanium. (It’s their most valuable resource.)
- They believe they deserve and have earned the things they have.
“In short, real estate bling is out,” Moore said, adding, “Quality is in. Today, most post-recession luxury home buyers are ignoring ‘super-size-me’ McMansions and focusing instead on lifestyle, uniqueness, artisanship, and future profitability.”
Austin tops the list of best places to buy a home
When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?
Looking at the bigger picture
(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).
That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).
They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.
“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”
Average age of houses on the rise, so is it now better or worse to buy new?
With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.
The average home age is higher than ever
(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.
With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.
Prices of new homes on the rise
Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.
Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?
The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.
Why Realtors are vulnerable to these rapid changes
(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.
Note: We’ll let you decide which company plays which role in the image above.
So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.
1. Zillow poaches top talent, Move/NAR sues
It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.
Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.
2. Two major media brands emerge
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