Study Shows Market for Luxury Homes Remains Strong

The results of a study on luxury real estate trends conducted by Sotheby’s International Realty and Architectural Digest suggests that the market for luxury homes remains strong. The survey finds that a significant percentage of luxury homebuyers are seeking to purchase an additional home within the next two years.

Specifically:

* One in three Architectural Digest subscribers (36 percent) is planning to acquire a secondary/additional home within the next two years.

* Of those who already own three or more homes, 49 percent plan to acquire an additional home within two years.

* Of those who already own a second home, 35 percent plan to acquire a third home within two years.

* In an indication that young affluent consumers are in the market for second homes, 44 percent of those under age 45 stated that they may acquire a second home in the near future.

The study, “Seeking a Luxury Lifestyle,” found that waterfront property (75%) is the most sought after amenity when buying a secondary residence. Additional amenities studied by the survey indicated the following preferences: on/near golf courses (48%); near aquatic activities (45%); in-home fitness center (34%); media room/home theater (32%); on/near ski slopes (28%); wine cellar (18%); gourmet/large kitchen (10%); large backyard (5%); and pool (5%).

UP UP UP!

Gradual Rise Predicted

After bottoming in the fourth quarter of 2006, existing-home sales are forecast to gradually rise through 2007 and into 2008, while new-home sales should turn around by summer, according to the latest forecast by the National Association of Realtors. David Lereah, NAR’s chief economist, said annual totals for existing-home sales will be fairly comparable between 2006 and 2007. “We have to keep in mind that we were still in boom conditions during the first quarter of 2006 with a high sales volume and double-digit price, it’ll be pretty much of a wash in terms of annual totals. The good news is that the steady improvement in sales will support price appreciation moving forward.”

Existing-home sales for 2006 are expected to come in at 6.50 million, the third highest on record, with a total of 6.42 million seen in 2007. New-home sales in 2006 should tally 1.06 million, the fourth highest on record, with 957,000 projected this year. Total housing starts for 2006 are likely to be 1.81 million units, with 1.51 million forecast in 2007, which would be the lowest level in a decade. Builders are pulling back on new construction to support prices of remaining inventory.

The national median existing-home price for all of 2006 is expected to rise 1.1 percent to $222,100, and then gain 1.5 percent this year to $225,300. The median new-home price, after rising only 0.3 percent to $241,600 in 2006, is projected to grow 3.0 percent in 2007 to $248,900.

Real Estate is STILL the Best Investment.