10 Things You Need to Know About Today’s Ultra-Luxury Home Buyer
Here’s the thing, though: The real story isn’t about granite countertops and stainless-steel appliances. If you’ve ever caught five minutes of an episode of “House Hunters,” you’d know everybody wants that stuff — not just the one percent of the one percent.
The more compelling news is how the ultra-luxury home market is changing, and how the purchase patterns of luxury buyers are responding to this change.
At RUHM, we live to toss around these kinds of ideas. So we couldn’t wait to talk with Laurie Moore-Moore, founder and president of the Institute for Luxury Home Marketing.
Our convo yielded these ten characteristics of today’s well-heeled crash pad connoisseur.
1 Ultra-luxury home buyers are growing in number.
The number of billionaires worldwide reached an all-time high in 2014, and the U.S. is home to the most billionaires globally.
“The forecast is that the number of wealthy is just going to continue to grow over the next ten years, and growing wealth equals growing demand. So that’s good news if you’re in the residential real-estate space,” says Moore-Moore.
2 For billionaires, the ‘perfect home’ is still a rare find.
The number of homes priced at $100 Million and above (yep, you read that right: $100 Million) surged this year. What does a surge look like when you’re talking hundreds of millions? In 2014, just three U.S. properties sold for $100 Million or more in the U.S. But in 2015, ten properties are listed at more than $100 Million country-wide. That’s a modest gain of six homes but a potential monetary gain of more than $600 Million. When’s the last time you added six extra crunches to your ab routine and got those kinds of results?
Compare that to the 5.3 million homes projected to sell in 2015 across any price point, and you’ll understand how limited the home supply really is in ultra-luxuryland.
3 They’re facing market scarcity — and higher prices.
Pancakes notwithstanding, luxury buyers differ in many ways from your traditional home buyer. But there’s one thing we all share: a tight real-estate market. In fact, at the $1 Million price point, the purchasing pool for 2015 is still relatively small.
“Homes priced at $1 Million or more represent between 2 and 2.2 percent of the total homes for sale in 2015,” says Moore-Moore. “If we look at this year, home sales at the million-dollar plus level, we’re talking about 117,000 homes nationally. These homes are a scarce resource and scarcity contributes to both their desirability and the jump in price.”
4 They live and work around the world.
“The wealthier citizens of the world own homes in a whole variety of countries based on whatever lifestyle choices they’ve made,” says Moore-Moore. “You’ve got a London businessman who has a townhome in central London and a condo in Singapore where he also does business. He might have a ski chalet in Whistler in British Columbia and a penthouse in New York because he’s there on business, too.”
5 International buyers are a strong force in the U.S. luxury real-estate market.
“We could look back over properties that have sold at the very highest price point in the U.S. and a significant amount of them will be international,” says Moore-Moore.
In fact, wealthy international buyers purchased more than $100 Billion in U.S. real estate between April 2014 and March 2015, according to a National Association of Realtors report. That’s roughly eight percent of total home sales, in dollar volume for that same period. And while eight percent doesn’t sound like much, consider this: Foreign buyers shell out nearly twice as much for a home as domestic buyers do, with the average sales price for an international buyer topping out at around $500,000 while the average sales price for a domestic buyer hovers around $256,000, according to NAR.
Fun Fact: Buyers in Asia / Oceania accounted for 35 percent of all international home purchases, followed by Latin America / Mexico at 23 percent and Europe at 20 percent.
Funner Fact: We’re gonna need more key lime pie. Florida (not New York or Cali) welcomed the most international home buyers to its shores this past year than any other state, according to NAR.
6 U.S. luxury buyers still lag behind in international home purchases.
“The U.S. buyer is somewhat less likely to buy abroad than the foreign buyer is likely to buy in the U.S.,” says Moore-Moore.
Pourquoi? “The international buyer has some unique motivations to buy internationally the domestic buyer doesn’t necessarily have,” she explains, citing “talk value” (read: bragging rights), a safe haven for investments and having a place to visit while their children attend American or Canadian universities among top reasons why international buyers seek property stateside.
7 They’re recasting their homes as destinations.
Wealthy buyers are looking for homes tailored to their particular lifestyle, and these homes typically have features that go well beyond those found in the average residence. For the ultra-wealthy, the home is not just a place to live, but also a place to work, entertain, pursue passions and interests and network. Thus, at this level, a home can become just as important of a business decision as a personal one.
“The high-end features in these homes can be amazing,” says Moore-Moore. We’re seeing walk-in refrigerator rooms, indoor putting greens and smarthome automation systems that control everything from the drapes to the coffee pot. We’re seeing showcase auto garages for car collections, which are huge right now. I’ve seen museum-style car-collection rooms in basements where you can look down through a transparent main-floor surface and see the cars. You can have 3,000 bottle wine collections, safe rooms that are 24 feet underground with hidden access, and so on.”
Need more proof?
Take that, Mark Cuban: Kobe Bryant’s home was once rumored to have a shark tank.
#ballersonfleek: Brooklyn Nets small forward Joe Johnson once lived in a home with its own hair salon.
Crystal-Blue Persuasion: This $19M Maui oceanfront home features its own short film, in the style of those awesome Choose-Your-Own-Adventure books.
8 They’re looking for a “Global City.”
The wealthy define a “Global City” as one that fosters financial and personal security among wealthy peer groups. “That means access to amenities, cultural activities and opportunities to do business,” says Moore-Moore.
Luxury buyers also have global mobility, so the word ‘location’ takes on a whole new meaning. They’re not necessarily worried, when purchasing a second or third home, how long the commute is or where they’re situated in terms of family, friends or schools. What they’re looking for is location clout: “To this buyer, where you ski matters, but more importantly, how that ski destination compares with other global ski destinations matters,” says Moore-Moore. “It’s about return on investment.”
9 They view their homes as image builders.
To the ultra-luxury consumer, having enough room isn’t as important as what those rooms represent. This buyer seeks value adds that reflect and promote his image.
“This buyer will have questions like, ‘is the home architecturally significant? What’s the provenance? Has there been a celebrity owner?” Moore-Moore explains. “For example, We have a contact who just listed the multimillion-dollar home of a well-known sports star. There’s someone out there, probably several somebodies, who can afford to live there and would be content to know their favorite sports idol once roamed the halls of their current residence.”
10 They expect marketing campaigns as deluxe as their dwellings.
“The real-estate professional who works in the upper tier has to be more marketing savvy than ever before,” says Moore-Moore. “They need to understand what I call ‘Lifestyle Marketing.’ They need to ask, ‘what does this home represent?’”
“Once you know the story, you need to be able to tell it in a compelling way, and you need to do it in the right media. The home should have a property-specific website, video, a public-relations campaign, targeted mailings, professional photography, and even parties and events surrounding its listing announcement.”
The bottom line: luxury homes need luxury marketing, and that means pulling out all the stops. So while this L.A. times article considers such efforts outlandish, we think it’s just good business.