Scott Sambucci (Altos Research) and Laurie Moore-Moore (The Institute for Luxury Home Marketing) present a look at the upper end of the US housing market, including demand drivers, price trends, and buyer-seller demographics.

1. HOW’S THE “LUXURY” REAL ESTATE
MARKET?
LAURIE MOORE-MOORE, CEO SCOTT SAMBUCCI, COO
The Institute for Luxury Home Altos Research
Marketing www.altosresearch.com
www.luxuryhomemarketing.com

2. What we’ll cover
• How’s the “luxury” market?
• What’s driving relative demand?
• Data, charts, and data… Miami, Las Vegas,
Boston, New York, Los Angeles
• Market effects of the Conforming Loan Limit
change
• Equities & Homebuilders

3. Las Vegas & Miami:
Luxury Segment vs. Market
Las Vegas: Lower price
volatility in the Luxury
segment since the crash
Miami: Luxury segment
showing positive year-
over-year gains!

4. ILHM Luxury Index vs. Altos 20-City Composite
Prices are down year-
over-year, but in better
shape than the national
market…
…due to more constrained
inventory and relatively
strong demand in this
price segment.
Why?

5. S&P 500 vs. TIF & JWN

6. Before the financial crunch:
There were about 9.2 million millionaires
in U.S. in 2007
Based on total net worth including home equity
2008: millionaire count fell 27% to 6.7 million
2009: count rose 16% to 7.8 million
2010: count rose 8% to 8.4 million
2011: count back to 9+ million*
Source: Spectrem Group, March 2011
Some sources say the count now exceeds 10 million

7. The “very rich”
Even the very rich have not been immune.
U.S. households worth $5 million or more,
excluding primary residence, fell 28% to 840,000
by the end of 2008, as compared to 1.16 million
households in 2007.
In 2009, this number rose 17% to 980,000
By 2010, rose another 8% to 1,100,000
March 2011, Spectrem Group

8. Count of HNWI’s on the upswing
• Globally, HNWIs’ financial wealth grew 9.7% in
2010 to reach $42.7 trillion, surpassing the 2007
pre-crisis peak.
• The global population of HNWIs grew 8.3% to
10.9 million
• 3.1 million are in U.S
SOURCE: Merrill Lynch CapGemni World Wealth Report, 2011
HNWIs are defined as those having investable assets of US$1 million or more, excluding
primary residence, collectibles, consumables, and consumer durables.

9. The “strained affluents” aren’t back
• Ultra consumers spending to maximize
lifestyle (without corresponding net worth)
• They were driving mass luxury, fueling entry
level luxury home purchases (often with
creative loans)
• They may be today’s short sales and
foreclosures.

10. Good News for Luxury
The number of million dollar home sales
in 20 top markets
jumped 18.6% in 2010*
(California million dollar home sales were up 21%)
NAR reported the over $500,000 market
segments outperformed others in 2010
*Source: DataQuick

11. 30% of the uber rich plan to invest in real estate during 2011
80% of those surveyed have assets of $50 million or more
--Institute for Private Investors survey, WSJ, January 2011

12. The luxury consumer
has a new set of attitudes
Bling is now limited to “Flamboyants” and the
“Strained Affluents”

13. Luxury residential real estate
is a portfolio play
as well as a lifestyle choice

14. International buyers and sellers:
A key component of luxury demand
• Trophy properties (It’s a competition!)
• Education related demand (Chinese especially!)
• Investment
• U.S. is “on sale” (currency issues)
• Perception of stability
• Desire for personal safety
• Escape from geopolitical turmoil
• Lifestyle
• Tax concerns

15. Market specifics: Trophy Sales
• Los Altos $100 million sale to Russian billionaire
Yuri Milner
• LA $85 million sale to 22 year old daughter of
sports entrepreneur Bernie Ecclestone
• Other big sales:
--Bel Air, $50 million
--Rancho Mirage, $42.9 million
--Greenwich, $35 million
--Corona del Mar, $34.1 million
--Manhattan, $24.5 million
--Lots of local record sales around the country

16. Market Specifics: Miami
• First 7 months of the year 517 properties sold
for $2 million+ (up 15.7% year-over-year)
• In July, 62.8% of the 78 properties sold at $2
million+ were cash transactions
• 5.5% foreign buyers (mostly Canadians)

17. Market specifics: Dallas
• 2006 – 4.6% Dallas homes sold for $500,000+
• 2010 – 5.4% Dallas homes sold for $500,000+
High end market share has increased
Chinese are driving sales in the newest luxury
condo in the Arts District.

18. Market specifics: Denver
• June sales of $1 million homes up about 6%
over last June
• Top sale - $6.18 million in Littleton
• List to sale ratio, 92.6%

19. Market specifics: Boston
• The Boston Globe reported that the city saw
a double digit price increase in its condo
market in the second quarter of 2011. Median
prices rose 10.2 % to $487,000 compared to
the same period last year.

20. New York City Condos & Co-ops

21. Market Specifics: Aspen
Fewer price
reductions in the
top price quartile
But even “cheap”
homes in Aspen are
$500k+ (i.e. bottom
quartile)

22. Miami Beach Condos
New listings bounced
higher this Spring, and
fewer price reductions
in the top quartile…
…along with tight
inventory means
steady DOM.
Top 3 Most Expensive Miami Beach Homes sold in July 2011: www.miamism.com

23. CA Coastal Markets
Prices down in San
Francisco but activity
is higher  lower
DOM
La Jolla prices up and
DOM is lower

24. Beach towns: LA & Orange County:
Prices showing
resilience to
increasing inventory

25. Days-on-market:
Higher priced sellers exhibit more patience
• HAURIN (1998), “The Duration of Marketing
Time of Residential Housing Donald Haurin,”
Real Estate Economics
• GLOWER, HAURIN & HENDERSHOTT (1995), “Selling
Price and Selling Time: The Impact of Seller
Motivation,” NBER Working Paper No. 5071
• ARNOLD (1999), “Search, Bargaining and
Optimal Asking Price,” Real Estate Economics

26. “The Diminimis Impact of Conforming
Loan Limit Changes”
DISCERN Analytics: Brett Kornfield & David Bugajski
http://www.discern.com/
June 2011

27. Matching Local Conforming Loan
Limits to Community Locations

28. S&P 500 vs TOL, RYL, MTH

29. CONTACT:
THE INSTITUTE FOR LUXURY HOME
MARKETING & ALTOS RESEARCH
Laurie Moore-Moore, CEO Scott Sambucci, COO
The Institute for Luxury Home Altos Research
Marketing (415) 931 7942 | @scottsambucci
214-485-3000 | @ilhm scott@altosresearch.com
Laurie@LuxuryHomeMarketing.com www.altosresearch.com
www.luxuryhomemarketing.com
blog.luxuryhomemarketing.com blog.altosresearch.com