Luxury Insights

Almost 10% of jumbo mortgages 'seriously delinquent'

2010-02-09T11:25:58-06:00

According to a new report by Fitch Ratings, "serious delinquencies" on prime jumbo mortgages rose again last month, nearing 10%. "Serious delinquencies" are payments at least 60 days late.

"The trend line for delinquencies indicates the 10% level could be reached as early as next month," according to a Fitch statement. The rate last month reached 9.6%, nearly triple that of last year. Jumbo mortgages are loans larger than Fannie Mae or Freddie Mac will finance.

It would be interesting to know what percentage of these loans in arrears are strategic defaults. Are you seeing luxury homeowners choosing to stop paying their loans even though they might be able to afford them?

Bubble Talk in Canada and London

2010-02-08T13:42:31-06:00

The Wall Street Journal is running a couple of articles looking at the rapidly appreciating real estate markets in Canada and the London and the concerns that these might be "bubbles."

Housing Rebound in Canada Spurs Talk of a New Bubble

Last Wednesday, a housing-price index for Canada's six biggest cities posted its seventh straight monthly gain, showing home prices in November are now back to their prerecession peak. Another broader measure shows the average home price in 2009 hitting a record. Home building has picked up too, with housing starts in December jumping to their highest level since October 2008...
Canada's finance officials say they're watching home prices carefully. The finance minister in December outlined steps he can take to cool things down, if needed. The central bank last month said it is watching the booming market with "vigilance, but not alarm."

Some observers foresee trouble...

The London Real Estate Bubble Is Back—and It's Scary

Looking at the real estate listings here is like stepping back in time to that unreal, giddy world of three years ago—before Lehman, before subprime, before AIG. Back to a period when everyone was either rich or on their way, either from flipping condos or running hedge funds, and the only direction was up.

But these prices are now, and they contain an ominous message: The London real estate bubble, arguably the biggest one of all, still hasn't popped...

California million dollar home sales “down, but not out”

2010-02-05T16:54:35-06:00

In 2006, million dollar home sales in California were clicking along at a brisk rate – one home sale in every nine was at the million dollar or above price point. In 2009, sales of California’s million dollar properties had skidded to just one sale in every 25, for a total of 18,621 million dollar sales in the Golden State for the year.

Around 29% of the buyers in the upper tier paid all cash. On the other side of the coin, in 2009, there were 4,925 notices of default (step one in a foreclosure) recorded on homes which had previously sold for at least a million dollars.

This is all according to a new report from San Diego based MDA DataQuick.

State wide, the company reports that of California’s million-dollar-plus sales:

332 sales were for more than $5 million
228 sales were $4 million to just under $5 million
590 sales fell in the $3 million to just under $4 million
1,902 sales were $2 million to just under $3 million
15,569 sales were between $1 million and $2 million

Wondering what you got for your money last year? DataQuick reports a median luxury home size of 2,646 with four bedrooms and three baths. Median price for luxury homes for the year was $605 per square foot (down about 10% from 2008)

The most expensive confirmed purchase in California last year was a 22,721-square-foot, 9-bedroom, 10-bathroom Bel Air house built in 2008 which sold for $26,500,000 in July.

A new auction record and trends in big spending

2010-02-04T17:20:15-06:00

8 minutes and $104,000,000 later...a new art auction record.

An Alberto Giacometti bronze brought £65,001,250 (about $104,000,000) at Sotheby's Impressionist and Modern Art Evening Sale yesterday in London.

As Georgina Adam, editor-at-large of The Art Newspaper explains to the BBC, "There's a market which is sort of exceptional for exceptional things. If something is a one in a lifetime opportunity, people will really step up to the plate and they will spend enormous amounts of money because it was a now or never opportunity."

Overall it was a stellar event for Sotheby's. An oil painting by Gustav Klimt fetched over £26 million and the sale total for the evening auction was £146,828,350 (almost a quarter billion dollars) also a record.

On the London real estate front, The Knight Frank Prime Central London Index shows a 1.1% increase in prime Central London real estate prices in January, with properties at the top of the market (the £10m+ segment) showing the greatest price appreciation. Inventory is low and buyers are lining up.

Despite the continued global economic crisis and uncertainties in the banking and financial sectors, the very affluent are clearly still making choice investments and spending. There are other hints at a possible loosening of the wealthy's purse strings and reports to expect more private jets at the super bowl this year...

What are you seeing in your luxury markets?

Terminology Tip: Don’t use "comparable properties"

2010-02-04T10:07:00-06:00

Yes, you read that right. The use of the words “comparable properties” or “comparables” can actually create problems for you with your upscale homeowner.

Here’s what happens. You say “comparable property” and your luxury homeowner thinks, “My home is custom. It’s special and unique. Sorry, but there are no comparables.” Sometimes they even tell you this. Whether they verbalize it or simply think it, they block out what you are telling them about relative value. Your excellent price opinion is ignored and agreeing on pricing can become more of a hurdle.

Sidestep the problem of comparables with a simple change of terminology. Instead, say, “These are the relevant properties with regard to homes a prospective purchaser for your home may also be looking at and considering.” Or, “These are the relevant properties which the buyer’s lender’s appraiser will most likely be reviewing to help establish an appraised value for your home.” This helps diffuse the issue of “But, there are no comparables.”

Don’t get caught in the “There are no comparables!” trap when a simple change in terminology to relevant properties can help you keep your seller more open minded.

January Wealth Report now available

2010-01-15T11:34:58-06:00

The January 2010 Wealth Report Newsletter is now available for members.

In this month's issue:

Retail Sales Rebound
Luxury rides strong holiday season to best month in two years
WealthSurvey: Search Engine Usage & Shopping Habits of the Wealthy
Luxury Brand Marketing: Planning For 2010 by Thaddeus Kubis
The Inextricable Link Between CRM and eCommerce by Darren Floyd
Luxury Goods Need New Venues by Steve Steinberg

Members can access this report on our website (login required). More on the report and the Luxury Institute here.

Collapsing Commercial Market in 2010 to Further Strain the Luxury Residential Market?

2010-01-12T13:25:39-06:00

Yesterday DS News ran an article on the expected collapse of the commercial real estate market in 2010. Here are some excerpts (emphasis mine):

According to the Emerging Trends in Real Estate 2010 report, issued by the Urban Land Institute and PricewaterhouseCoopers, most investors will recognize massive losses in the commercial real estate market. Value declines will eventually total 40 to 50 percent of market highs, and surveys in the report indicate 2010 will be the worst time for investors to sell properties in the report’s 30-year history...

Richard Parkus, Deutsche Bank commercial real estate analyst, believes this is just the tip of the iceberg. He predicts enormous losses and a large number of banks failing as a result of the declining commercial real estate market.

As tenants go bankrupt, downsize, or invoke their escape clauses, commercial real estate property owners have begun to feel the serious effects of the economy. By the end of 2010, the national vacancy rate is expected to reach 18.5 to 19 percent, the highest recorded since 1986.

Of course if this comes to pass it will be more bad news for the luxury residential market. As you know the investors, brokers, developers, tenants (business owners), and other players in the commercial market are often potential buyers and sellers of luxury homes. Even in markets that are generally stabilizing or improving in 2010 this could mean trouble in the upper tier.

Kitchen trends for 2010

2010-01-11T14:42:10-06:00

Today’s kitchens today are continuing to evolve into family rooms which can accommodate multiple cooks, family dining, and entertaining.

Here are just a few of the major design trends popping up in luxury multi-purpose kitchens as 2010 begins.

Countertops
Kitchen countertops are increasing in mass – think thick – and demand is growing for new surface materials. As granite wanes in popularity, crackle glass, concrete, and wood (with decorative edges) are all moving to the fore as popular countertop materials. One of the most innovative counters combines glass with LED lighting. The result is a glowing glass countertop which can be programmed with most any color to match your mood of the moment.

Counters in new kitchens may also vary in height to add visual interest and to create work zones for special purposes and for both short and tall cooks. Counters and islands are also increasingly designed to double as serving and dining areas.

Work zones
As more activities gravitate to the kitchen, designers are building in special purpose areas. A quick food prep station makes simple meal preparation and cleanup easy. A baking center offers ingredient storage within reach and a counter height designed for chopping, mixing, and rolling. A coffee bar or a wine tasting and beverage center are other popular special purpose work zones.

Sinks
Large farm sinks are a hot trend and multiple sinks continue to be in demand. Water conserving faucets are part of a trend toward eco-friendly kitchens.

Cabinetry
Mid-height cabinetry is a major trend in contemporary kitchens and beginning to appear in traditional kitchen designs as well. Shorter cabinets may “float” on the wall or incorporate European-style legs and even be used as room dividers. In-demand cabinet materials include stainless steel, environmentally-friendly bamboo, pecan or alder wood. Cabinets are customized with interior fittings for efficient storage. Horizontal cabinet doors (sometimes motorized) are another emerging kitchen trend.

Although the all white kitchen is still popular, cabinetry is also showing up in a variety of finishes and colors to give a kitchen the look of a furnished room.

Appliances
Forget the concept of a cooktop, double oven, microwave, dishwasher and a refrigerator creating an adequate kitchen. Today’s cooks want more. Extra dishwashing drawers, elaborate coffee making appliances, warming drawers, additional ovens, wine coolers may all be part of a luxury kitchen and many of these appliances may be hidden within cabinetry.

On the other end of the spectrum, forget subtle, some homeowners are using the refrigerator as kitchen art. Coolors, an Italian company will silk screen a refrigerators with a bold animal print, your favorite photograph or most any other image. The range hood or cabinet fronts can be silk screened to match.

Electronics
The kitchen is now home to televisions, computers, and sound systems. With friends and family gathering in the kitchen, entertainment and information need to be within reach.

Multiple kitchens

Luxury homeowners frequently want multiple kitchens. In addition to the primary gourmet kitchen, a catering kitchen – where preparations occur for dinner parties and other entertaining – may be on the must have list. A mini-kitchen in the master bedroom and another in the primary guest suite provide a convenient place for a midnight snack or that first cup of morning coffee. Of course, what was once the barbeque grill has morphed into a full outdoor kitchen with ice maker, dishwasher, dining area and more.

The kitchen is the heart of the house and this decade begins with trends which focus on making it more functional for a variety of lifestyle purposes and more attractive as a entertaining center.

Where does the sun set twice each day?

2010-01-04T21:15:50-06:00

The new year is off and running with a new real estate milestone – the opening of the world’s tallest building, the Burj Khalifa in Dubai.

Topping off at 2,717 feet, the multi-use building offers residences, office space and a luxury hotel. Apparently the view from the top extends more than 60 miles. This means you can watch the sun set from the ground floor, ride the elevator to the top and watch the sun set again!

Due to the real estate challenges currently faced by Dubai, predictions are that the building will see quite a few sunsets before it obtains full occupancy.

Here's a 12-minute (!) promo video of the launch extravaganza via ITM News:

And more press coverage and commentary:

Of Burj and Babel - Wall Street Journal
World's tallest building: Is the Burj Khalifa a herald of economic woe? - Christian Science Monitor

Custom Branded Market Reports from Altos Research

2009-12-01T23:08:27-06:00

It is no secret that we are nuts about market data. You should be too.

True market knowledge and expertise is often a key differentiator for luxury agents, and detailed market updates can be tools for success in the luxury market.

Since so many of our members use custom market reports and other marketing tools from Altos Research, we thought we do a quick post to highlight one of the new tools available to Altos users.

One-Off Custom Branded Market Reports

As Ricky at Altos notes in a recent blog post:

Altos Research now offers you a quick and cost effective solution to generating personally branded reports for your prospects and clients. With our Pay-Per-Report Feature, you can easily brand the report for your particular client or prospect.

Upload a picture of the home, call it the "Jim & Tammy Stevens Market Update" to really impress your prospects. You can even enter the a property address in the report name field and use this report for your CMA's. You asked, we listened and now your in control. The reports are delivered within minutes as a PDF attachment to your email.

Here's a quick demostration.

If you are not an Altos client, you can find more information on discounts for ILHM Members here.