After a year of “stable,” “solid” and “consistent” luxury real estate industry, the latest annual report by Coldwell Banker Global Luxury identifies the “power markets to watch” in 2018.
The report defines a “power market” as a luxury metro area that typically attracts high-net-worth individuals, who seek a range of cultural and lifestyle opportunities. Airport accessibility, the ease of doing business, and a housing stock that offers exclusivity and privacy are key characteristics.
To create a list of top up-and-coming markets for condos and single-family homes, Coldwell Banker Global Luxury teamed up with The Institute for Luxury Home Marketing. The high-end status of each of the identified cities encompasses such metrics as sales-price-to-list-price ratios, days on the market, median list price and inventory, which are substantiated by the local expertise of Coldwell Banker Independent Sales Associates.
The findings characterize the top five buyer’s markets and the top five seller’s markets, which are concentrated in eight states across the country. In the latter demand exceeds supply, giving homeowners an advantage in price negotiations. The former, on the other hand, have excessive supply, which benefits buyers.
The top buyer’s markets are Boca Raton, Miami, Park City, Santa Barbara and Scottsdale, while the top seller’s markets are Denver, Nashville, San Francisco, Seattle and Silicon Valley.
Top Buyer’s Markets
“2017 was a very strong year for real estate in Park City,” says Dennis Hanlon, realtor with Summit Sotheby’s International Realty and Haute Residence partner. “The number of single-family homes sold in the Park City city limits and the surrounding areas increased by 5% since 2016. As home prices inside the city limits increased to an average price of over $1,000,000, we saw more buyers purchasing in the surrounding area.”
This assertion seems to hold true for the other luxury buyer’s markets, where purchases follow a propitious climate and location (all of the five cities have major airports and a focus on a resort lifestyle).
“Other than the ideal year-round climate, Santa Barbara has an amazing array of world-class music, theatre, and lectures among other things,” says Chris Palme, Coldwell Banker Global Luxury broker and Haute Residence partner. “That is unusual for a small city.”
The seller’s markets have enjoyed rapid wealth creation – albeit for different reasons – which has quickly plummeted inventory as more and more individuals relocate there to ride the booming economy.
“A lot of people don’t think of the private sector job growth we have [in San Francisco] and the power of the IPO,” says Rachel Swann, managing Partner of The Agency’s first San Francisco office and Haute Residence partner. “The enormous amount of wealth circling the city is incredible. Home prices are up 12% in January due to lack of inventory, and we’ve got 39,000 housing units on the horizon but the city also battles shortages in labor and hikes in construction costs that cripple the building of those units. In 2018, we are going to see a lot of changes in the Building and Planning sectors that will approve density in exchange for more affordable housing. I also see big trends in technology and Artificial Intelligence.”
Home to Microsoft and Amazon, Seattle has also drawn a tech-savvy crowd, lured by high-paying jobs, affordable cost of living and vibrant culture.
“Washington State has no State income tax and is very much on the radar of the luxury buyer as well as the luxury second home buyer segment of the market,” says Moira E. Holley, Seattle-based luxury real estate agent and Haute Residence partner. “If a California resident wishes to relocate their primary residence to Washington State, this can mean 51 % of the year in Washington with 49% in California, for example.”