2010 Outlook: Conscientious Consumption

As if you needed a blog to tell you that the days of conspicuous consumption are over… but that’s what Wall Street Journal blogger Robert Frank has proclaimed. In a recent post, Frank predicted that the demand for luxury items would return in 2010…but on a modest scale.

“Conspicuous consumption will continue to be replaced by conscientious consumption, with pricing, quality and morality (impact on the environment, etc.) becoming more important in high-end spending,” he wrote. Luxuries like private jets, yachts and vacation homes are already showing “tentative signs of recovery,” he added. Luxury real estate specialists such as Ronda Moll agree that the affluent seem to be growing comfortable with investing again.

“We have definitely seen a slow but consistent increase in affluent clientele,” noted the Lake Tahoe-based Realtor. “These buyers are savvy enough to not look for the bottom of the market, but rather have realized that there are great opportunities to take advantage of right now.”

Last week’s MarketWatch report on luxury spending also found that the high-end market segment is making a modest comeback in 2010, with luxury jeweler Tiffany & Co. reporting better-than-expected holiday sales.

What does that mean for the shared interest fractional industry?

"Shared interest fractional ownership clubs like The Élan Collection are hitting at the most opportune time in the luxury market,” pointed out Dane Soderberg, broker associate with PS Platinum in La Jolla, Calif. “Most luxury homes are second, third or even fourth residences. The usage over the years has been limited to two or three months of the year, while the cost of ownership remained year round.”

Added Brett Comps, owner-broker with PS Platinum: “With the recent changes in the market, many owners have decided to sell their vacation homes. While owning a vacation home remains part of their desired lifestyle, the expense has not. Shared interest homes allow top end clientele to keep the same level of usage at a fraction of the price."

Do you see conscientious consumption at work in your local market? Do you think this philosophical shift will open up opportunities for shared interest ownership opportunities?