The 2014 Luxury Market Report

by J. Marshall Pearson


Forget what you’ve read about the luxury market in the past few years, because the facts are changing.  According to Bloomberg News, the number of million-dollar home sales in the U.S. is double their historical average. Purchases of homes $1 million or higher rose 7.8 percent in March from a year earlier, according to data released by the National Association of Realtors. Transactions for homes priced $250,000 or less, which represent almost two-thirds of the market, plunged 12 percent in the same period as house hunters found few available homes in that price range.

Luxury-home sales are climbing as the economy improves, and value-driven transactions are starting to build confidence among affluent buyers. At the same time, slow wage growth, tight credit standards and escalating prices are putting homeownership out of reach for many other homebuyers.

“The real estate market is the ultimate reflection of confidence, wealth and income,” says Sam Khater, deputy chief economist at CoreLogic Inc., in an article by Bloomberg News. “The same factors driving the income stagnation in the middle are driving the income momentum at the top.”

Million-dollar-plus homes made up 2 percent of sales nationally in February, about the same proportion in 2008, before credit markets collapsed and drove down the share to the historical average of about 1 percent, according to Khater.

With regards to the real estate market worldwide, there are several noticeable trends revealed by a recently released study about global perspectives and affluence. While the recession of the mid-2000’s surely affected wealthy people in ways similar to less-wealthy consumers, affluent people raised their standards and expectations rather than lowering them. Affluent people – those who earn a six-figure salary – expect quality and a great deal. They are far more likely to be value-oriented than price-sensitive. And because of their focus on getting great value for their money, it is clear that the wealthy are optimistic about financial recovery, and take great care to do research and consider overall value before making a significant investment.

Read More Related to This Post

Join the conversation

New Subscribe

  • This field is for validation purposes and should be left unchanged.