While a third of homeowners struggle to stay above water on their mortgages, nearly a quarter of those in the upper income tiers have been trading up to take advantage of deals in the luxury home market.
Lured by lower prices, one in four U.S. consumers with annual income of $150,000 or more have bought a residential property since 2008 at a median purchase price of $509,000, up 3.2 percent from the 2005 to 2007 period. Most new residences (83 percent) are single-family homes and two-thirds of these are in suburban settings. Seventeen percent plan to purchase additional property this year, while 23 percent of those younger than 50 plan to buy in 2011.
According a new survey by the Luxury Institute and the Institute for Luxury Home Marketing, high net-worth homeowners are taking advantage of the downturn to trade up into higher-priced new primary residences. More than one-third (37 percent) of the wealthy value their homes at $1 million or higher, while 32% assess their primary residence to be worth $500,000 or less.
Seventy percent of wealthy homebuyers used a real estate agent to help with their property purchase and two-thirds of those say that they would work again with the same agent.
“Luxury homebuyers recognize that many premium homes are available at relative bargains,” said Milton Pedraza, CEO of the Luxury Institute. “Similar to the luxury retail landscape, luxury home sales provide more evidence of durability at the high end of the market.”
“Luxury is the good news story in real estate,” said Laurie Moore-Moore, CEO of The Institute for Luxury Home Marketing. “The number of wealthy households has jumped back to pre-recession levels and affluent home buyers are actively purchasing. The National Association of Realtors’ statistics show that national home sales at $1 million and above were up more than 18 percent year-over-year in 2010. Strong activity continues this year as well.”