Luxury Real Estate Market Predictions 2011

Nothing inspires market predictions like a New Year. Along with a new sense of optimism and opportunity, comes the usual chorus of predictions sung by real estate experts and economists. Will the luxury market continue its recovery in 2011? Will international buyers be entering the market with the same enthusiasm as they did in 2010? What will the luxury housing narrative be in 2011?

These are the kinds of questions even the savviest real estate investors are asking themselves as they usher in 2011. Thankfully, our friends at Ocean Home magazine have offered up some answers. The editors recently interviewed Laurie Moore-Moore, Founder and CEO of The Institute of Luxury Home Marketing in their recent report, "Luxury Market Predictions for 2011." Here are some key insights from the interview:

1. HOUSEHOLD WEALTH RECOVERY

"Unless we have some 'wild card' economic event that sends everything spiraling down, the wealth recovery will continue and it will continue to be more global," said Moore-Moore. She noted that North America, Europe, China, Russia, Turkey and Brazil will continue to see a greater percentage of growth in the number of wealthy households. And what about the U.S., specifically? Net worth for U.S. households and individuals increased 2 percent in third quarter 2010. While the average U.S. personal savings rate climbed from 0.4 percent in 2005 to 4.3 percent in 2009, and hit 5.5 percent in third quarter 2010. All of these factors seem to indicate that more affluent consumers may be in a stronger position to purchase a luxury vacation home in 2011.

2. LESS IS MORE

We've been saying this for the last year: affluent consumers are shifting away from conspicuous consumption towards conscientious consumption. This trend will continue in 2011. Says Moore-Moore: "Attitudes of affluent consumers appear to have undergone some changes since the economic meltdown. At least for now, 'whispering wealth' rather than 'flaunt it if you have it' seems to be a common philosophy." The luxury vacation home search is now defined by quality and exclusivity as opposed to big, boisterous displays of wealth. As BUILDER magazine's Jenny Sullivan pointed out at the end of 2010: "Today's value set is more cerebral, focusing on simplicity, resourcefulness, health, community, and practicality." Simplicity, resourcefulness, practicality, quality and exclusivity are values at the very heart of The Élan Collection, which brings the benefits of luxury fractional home ownership to the exclusive world of private residence clubs. Simplicity...because Élan owners can enjoy resort-caliber amenities and services while The Élan Collection takes care of all of the details associated with typical home ownership and property management. Practicality...because they are only buying what they will realistically use. Quality...because The Élan Collection offers uniquely crafted properties so rare that they can never be duplicated at any cost today. And exclusivity...because The Élan Collection only offers a handful of fractional opportunities in each residence, and many residences are set behind private gates, nestled on their own private beach or tucked away on a quiet hillside overlooking town.

3. LUXURY MARKET PERFORMANCE

"Nationally, the luxury housing market has already started to outperform the overall housing market. According to the National Association of Realtors, the market segment which has seen growth in the number of transactions in 2010, is the over $1 million price point," said Moore-Moore. Manhattan is one area where the luxury market's upward motion is in full effect. The New York Times reported today that luxury home sales of $3 million and up made a strong return in the final months of 2010.

4. INTERNATIONAL BUYERS

According to Moore-Moore, U.S. purchases by international buyers will be important in 2011. "The growth in wealth around the world will help fuel demand for foreign buyers to purchase in the U.S. The U.S. is still viewed as a safe haven for investment," she said. She also noted that "prime property in prime locations (especially waterfront with private docks or marina access) will lead the rebound when it comes." That's welcome news for future owners in The Élan Collection. From a beachfront estate on the Turks and Caicos Islands to a spacious lakefront retreat right on Lake Tahoe, Élan's properties have been handpicked for their sought-after locations in some of the world's most desirable destinations. And what's more, The Élan Collection continues to search out properties in prime locales across the U.S. and abroad to give owners the quintessential Élan vacation lifestyle experience.

No doubt, 2011 will be the year to watch for luxury real estate buyers. Will they look back on 2011 with pride, knowing they invested in a luxury vacation experience that allows them to put their own well-being and the health of their personal relationships first?

Fractional "Good" News Round-Up: Élan Style

When it comes to news about luxury real estate and the fractional market, it's not all doom-and-gloom. Since Fractional Life compiled their list of luxury housing "good news" for the upcoming Fractional Summit USA, we thought we'd add our Élan cents. Here is our round-up of the latest fractional "good news" from around the globe:

• According to the National Association of Realtors (NAR) 2010 Investment and Vacation Home Buyers Survey, vacation home sales rose 7.9% from 2008 to 2009. The mean vacation home purchase price in 2009 actually rose by an average of $19,000 to $169,000. NAR Chief Economist Lawrence Yun noted that "the higher vacation home price may reflect increased sales in higher priced markets, particularly in areas of Florida and California where prices became highly attractive for buyers over the past year." Many U.S. buyers are also looking overseas where they get even more for their money--such as The Élan Collection's Turks and Caicos property (which enjoys tax haven status).

• A surge in high-end real estate sales in Aspen (where Élan's Castle Creek Villa resides) during the first half of 2010 has begun to turn broker heads, according to the Aspen Daily News. According to one local brokerage firm, 81 percent of second quarter sales in Aspen, Snowmass Village and Woody Creek were above $4 million, compared to 41 percent during the same time a year ago. Add that to the fact that monthly dollar volumes for luxury real estate sales for the first quarter of 2010 were also anywhere from 50% to 300% ahead of the previous year's monthly total (see The Real Estate Channel), and you've got yourself a very interesting upward trend in the Colorado Rockies.

• As per Fractional Report, long term demand for fractional vacation ownership looks favorable. There are 39.2 million people in the U.S. ages 50 to 59--a group that dominated sales in the first part of this decade--and 44.8 million people between the ages of 40 and 49.

• The latest Case-Shiller Home Price Index reported that home prices increased from April to May by 1.3 %. Prices also increased 4.6% year-over-year. San Francisco (where Élan's newest Alta Collina residence resides) had an 18.3% year-over-year price increase; while San Diego (where Élan's Harbor View West and Casa del Mar are located) had a 12.4% increase. The California Association of Realtors' June numbers also support the Case-Shiller findings: the statewide median price of an existing single-family home increased 13.6% in June compared to the same month a year ago.

• Fractional Life reported earlier in July that Property Frontiers, a UK-based property investment specialist, said 65% of their overseas investors this year have expressed interest in fractional investments.

• And in an illuminating column that opened the door for a potential surge in fractional ownership popularity, the New York Times' Paul Sullivan recently asked: “If it causes stress, is it really a vacation home?” When the industry average for second homes is just 30 days of use per year, and you add in the time and costs of maintaining a vacation home--the idea of sharing ownership and maintenance costs might sound like a smart decision.

Got any good news to share about the luxury real estate or fractional market? Please share it with us!