All posts by Camilla McLaughlin

Nuances: The 2019 Luxury Outlook

Usually, it’s possible to sum up the outlook with a pithy phrase, but this year the luxury landscape is nuanced. Some markets sizzle; others simmer. Dynamic outside forces are at play and will potentially exert even more influence in 2019. In the background, the words recession and bubble are whispered, but most experts don’t see either in the cards, particularly for residential real estate in 2019.

“In most markets, I think it’s a case of ‘from great to good,’” says Stephanie Anton, president of Luxury Portfolio International.

“We’ve left a crazy market, and we’re moving into a more normal market,” shares John Brian Losh, chairman of Who’s Who in Luxury Real Estate. “We are beginning to see a more normalized market where supply is more equal to demand. Even in the luxury market, there are fewer bidding situations.”

According to Redfin, the number of competitive offers fell from 45 percent to 32 percent in 2018. Still, some ZIP codes in busy markets such as Boston, Washington, D.C., and the Bay Area remain hotbeds of competition, with the number of multi-bid scenarios increasing in the third quarter.

© istockphoto.com/JZHUK

Concerns about potential bubbles continue to percolate, but economists and other experts caution that fundamentals are strong and for real estate the next downturn will be different. “The recent tax reform and increased government spending have been a shot in the arm of the U.S. economy,” Tim Wang, head of investment research at Clarion Partners, explained to journalists at the Urban Land Institute’s fall conference. Wang and other experts expect the current expansion of the economy to continue through 2019, tapering to 2.5 percent next year.  

“The housing market is following the trend in the overall economy, which needs to be noted because housing led the last downturn,” comments Marci Rossell, chief economist for Leading Real Estate Companies of the World, citing politics and global uncertainty as factors affecting real estate. This time, she says, “the casualties will be a little bit different, and because of that I don’t anticipate a meltdown.”

A cooling period is how Craig Hogan, vice president of luxury at Coldwell Banker Real Estate, characterizes the luxury climate, particularly in the second half of 2018. It’s a change Coldwell Banker has anticipated. “For any of us to think it was always going to be incredible is a little naive. The market is always going to fluctuate.” Hogan says it’s important not to interpret cooling as a market decline. “Cooling is a normal fluctuation, while a decline happens when the value of homes begins dipping.”

“There hasn’t been any great price suppression. Houses are staying on the market a little longer, but demand is still healthy,” says Losh.

“I think we’re still going to have a very strong year overall. I do believe we’re seeing price adjustments, and that’s okay. I think the key is watching how long properties are staying on the market and watching the size of the price adjustments,” observes Lesli Akers, president of Keller Williams Luxury International.

The average sales price for Sotheby’s transactions is up year over year. “From a luxury point of view, many of our companies are having a record year,” says Philip White, president and CEO of Sotheby’s International Realty. “Revenues are up, and in some cases pretty significantly,” he shares, noting that this number also reflects significant recruiting and/or acquisitions by some companies.

Recent stats show prices for upscale properties still increasing, but at a slower pace than past years. The number of sales in many places has dipped, but that differs by location, and in more than a few instances sales still exceed 2017.

Data from the Institute for Luxury Home Marketing (ILHM) shows median prices for single family luxury homes climbing 8.5 percent in November over October, while the number of sales fell 11.7 percent. For attached luxury properties, sales rose 2.6 percent with a 2.3 percent hike in prices.  

Putting the current market for real estate overall into perspective, Lawrence Yun, chief economist for the National Association of Realtors, said, “2017 was the best year for home sales in 10 years, and 2018 is only down 1.5 percent year to date. Statistically, it is a mild twinge in the data and a very mild adjustment compared to the long-term growth we’ve been experiencing over the past few years.” Yun and other housing economists are quick to point out that new construction still hasn’t caught up with demand and foreclosure levels are at historic lows, factors which make the current climate different than the run up to the recession. NAR’s forecast calls for an overall price increase of about 3 percent in 2019 while the number of sales flattens or edges up very slightly.

Tale of Two Markets

Luxury’s story is a little different. “This year the luxury market has been a tale of two markets, for sure. Some areas are struggling, but most have been stronger than many realize, particularly in the first half of the year. As median prices have been slowing (and getting lots of media attention), the top 5 percent of many major metro markets nationally have been growing, with sales over $1 million up over 5 percent year over year and prices breaking records, in some cases by double digits. In the majority of markets, inventory has been selling faster. This is happening simply because of the health of the affluent,” observes Anton.

What sets this year’s outlook apart is that some places are having a strong, dynamic market, while others are seeing a softening, often only in specific price brackets. “The slowdown that started on the East Coast is having some effect on the West Coast. But it’s not a typical slowdown,” says Mike Leipart, managing partner of new development at The Agency. “Good product that has relative value is continuing to transact.”

The top three sales nationally in the third quarter, each over $30 million, occurred in Laguna, and seven out of the top 10 were in Southern California.

Rather than a general market malaise, Leipart characterizes the slowdown as more of a spec home problem. “It’s just too much has been built too fast, and not all of it is very good. The people who thought they could build a house for $15 million and sell it for $30 million are struggling.”

The higher price points in L.A. may see an even stronger downturn in the near future, suggests Bob Hurtwitz, owner of Hurwitz James Company, who typically works in the very high end. “There is a lot of inventory on the higher end, and luxury home buyers are usually in a position to wait and see. The drops in price are a lot more dramatic on property at $15 million and above, and buyers are aware of the benefit in waiting to see how it plays out. At the ultra-high end of $100 million or more, you are going to see and already are seeing huge reductions in price.” What’s hot in L.A.? Luxury penthouses in full 24-hour security buildings in prime areas, according to Hurwitz. “High-end penthouses will continue to be in-demand from foreign buyers purchasing as a part time home or for housing for their children.” Other price brackets, notably the $1.5-million to $3.5-million range, are busy, and, Hurwitz says, his agents are doing a lot of deals.

Perceptions of prices in Manhattan can be skewed, since recent closings are often for new construction for which contracts (and prices) were written a couple of years prior. Even though stats show sales decreasing, Ellie Johnson, president of Berkshire Hathaway HomeServices New York Properties, says, “There is still a healthy but steady group of buyers that are still out there in the high-end luxury landscape.” Additionally, New York is particularly keyed to Wall Street, and volatility in the stock market often means more money gets transferred into brick and mortar. “We’ve seen an uptick that we didn’t have at the beginning of the fall season,” Johnson observes. Despite a less than stellar real estate market at year end, New York remains a global gateway and the top city for global wealth.

Manhattan

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Los Angeles

© istockphoto.com/SeanPavonePhoto

St. Petersburg

© istockphoto.com/SeanPavonePhoto

In other locations, particularly those with lower prices for upscale properties compared to California, Florida or New York, reports show strong interest and price growth. An acre in one of Atlanta’s prime addresses in Buckhead can demand as much as $1 million. It’s just one indication that luxury here continues to reach new price levels with considerable demand coming from outside the region, including buyers from California and Florida. Some relocate simply because they want a home in the city; others follow corporate moves. The city has also become a favorite for the film industry, which has become a $4 million industry. “It’s changing everything about this city,” says Debra Johnston with Berkshire Hathaway HomeServices Georgia Properties. Luxury really doesn’t begin until the $5 million threshold, says Johnston, but prices compared to Florida and California are reasonable.

At one time, it was thought it might take more than 20 years for Florida real estate to recoup from the recession. In October, the state tracked 82 consecutive months of price hikes for both single-family and condo-townhouse properties, with many cities showing double-digit increases in the number of sales. “The overall market in Florida, particularly higher-end areas such as Sarasota, Naples and Palm Beach, is definitely strong and stable. Maybe not as robust as say 2013 and 2014, but we haven’t had any major slide — except the economists talking about the market slowing down,” says Pam Charron with Berkshire Hathaway HomeServices Florida Realty in Sarasota.

“The St. Petersburg market seems to be performing differently than other Florida markets and other national trends,” observes Tami Simms with Coastal Properties Group, noting November sales skyrocketed over the prior year. “We have developed into a year-round market with luxury downtown condominiums in high steady demand.” Another sign of consumer confidence is lack of defaults on pre-construction sales. “When we experienced the crash, those buildings that had been sold out prior to completion experienced a significant number of defaults. We see none of that in this instance.”

Florida is one of several states including Texas and Nevada benefiting from changes in tax law. Tax changes not only force some to reevaluate where they live, but they also impact the margins of price brackets. “While it doesn’t mean people wholesale leave New York or San Francisco, marginal changes tickle up and trickle down to the next closest price level,” and it will take several years for that to be felt, says Rossell.

The New Market

“So many trends have taken place they are no longer trends, they are the new market,” observes Hogan, using new construction as one example. “It doesn’t matter where you go or who you talk to, new construction is part of the conversation.”

Global demographics will have a long-term impact. “What luxury is adjusting to is a different demographic worldwide. Those aging baby boomers are kind of done with big homes and the following demographic is 50-percent smaller,” Rossell says.

Changing demographics affect location and property type. “I think we’ll see increased demand for primary residences in traditional second home and resort markets. We are seeing this trend in select markets, as individuals who have the freedom to work remotely are opting to live in places where they feel their quality of life will be the best,” observes Anthony Hitt, president and CEO, Engel & Völkers Americas.

Summer 2019 will mark the most prolonged economic recovery since World War II, but wild cards including interest rates, a trade war and further instability could easily derail this expectation. However, there is a silver lining to the current market. Increasing inventories will bring some buyers back to the market and create more demand. “I think it’s going to a be a great opportunity. People will buy things that they haven’t considered, and they’re going to buy more of them. I think that’s been a big challenge. We’ve not had the inventory, and a lot of buyers kind of just fell out of the market because they didn’t feel like there really was one,” explains Akers.

ILHM President Diane Hartley believes 2019 will be a year of opportunity for both buyers and sellers provided they remain agile, innovative and adaptable to their local market influence.

This story originally appeared in the Winter 2019 edition of Unique Homes Magazine. 

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Markets to Watch in 2019

Every year we select locations to highlight as Markets to Watch. This year change is underway and we take a look at some top performers, others that are beginning to transition, and a handful of under-the-radar locations that are emerging.

Austin, Texas

On track for another record with sales up more than 3 percent, Austin’s luxury patina shines ever brighter. In October, the medium home value in Barton Creek increased to $1.02 million, making it the city’s first million-dollar neighborhood. Austin’s charms include no income tax to win over newcomers, but music and tech might be tops.

Bozeman, Montana

Bozeman might seem like a sleeper on this list, but with ranches, the Yellowstone Club and Big Sky country it’s an under-the-radar hangout for demi-billionaires and billionaires.

Brooklyn, New York

No longer second best! Buyers are making Brooklyn a first choice. Median prices in the most expensive neighborhoods hit the $1 million mark. Israelis, Chinese and Western Europeans also gravitate here. It’s no surprise this New York City borough is No. 2 on Urban Land Institute’s Markets to Watch. 

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Chicago, Illinois

By August, the Chicago area recorded as many luxury sales as in all of 2016 or 2017. Sales of $1 million-and-up properties set a record in the third quarter with a 19-percent increase over 2017. According to RE/MAX, luxury is booming in the west loop area. Upscale suburbs trail the city. Lots of new condos and stunning new buildings open doors to more urban opportunities in a market that hangs in the balance.

Dallas, Texas

Few cities have charted a post-recession course as strong as Dallas and the city remains Urban Land Institute’s No. 1 location for overall real estate prospects in 2019. But the dramatic post-recession price increases are over, say economists. Moderating prices and adjusting inventories are positive indicators that that a move back to a normal market is underway.

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Denver, Colorado

Real estate’s Rocky Mountain high isn’t over yet. Denver continues to rank in the top group on many lists. In the upscale bracket, a shift toward balance is underway with the inventory of $1 million-plus homes at about seven months. Year-over-year prices are up on average 9.29 percent. Boulder remains a sweet spot for luxury, ranking 10th among cities and towns with at least 10 neighborhoods considered million-dollar.

Las Vegas, Nevada

Projections call for appreciation as high as 10 percent this year. Nevada was the fastest growing state, with new platinum communities; forward-looking, innovative architecture; and spectacular views capturing the attention of buyers looking for lifestyle and tax relief.

Hilton Head, South Carolina

Coastal South Carolina and Georgia are ground zero for demographic shifts and the growing ability among the affluent to live wherever they want — a trend just taking off. New developments including Palmetto Bluff add to demand for the Hilton Head region.

Minneapolis, Minnesota

Moving toward balance. A long-awaited uptick in homes on the market is one of several hints of a market shift. Median prices reached a record high this fall, and homes still sell quickly. Still the inventory of homes for sale is one of the lowest in the country. Upper tier and move-up brackets are less competitive.

Northern Virginia

D.C. continues to be in the top group on watch lists but Amazon’s recent announcement makes real estate in Northern Virginia much more interesting. What the prospect portends for current homeowners is uncertain, but sure to make this a market to watch in 2019.

Park City, Utah

No longer just a ski hangout, this Salt Lake neighbor is luxury’s newest player. The most desirable neighborhoods see a shortfall of inventory. Land prices increased by 25 percent with the highest number of sales occurring at Promontory. Opportunities abound: new projects at The Canyons, a large expansion of Deer Valley, a $4 billion renovation of the Salt Lake airport and a bid for the 2030 Olympics.

Wikimedia Commons / Don Lavange

Portland, Maine

Beaches and skiing, does it get any better than that? Hipsters meet old money here. Ranked among the top 20 for entrepreneurs, the city has a growing tech industry and one of the best foodie scenes in the Northeast. Look for more new construction. Prices will continue to ease upward as more people discover this hidden gem.

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Santa Barbara, California

Opportunities for buyers in many California locales continue to increase as markets shift. Median prices in Santa Barbara in November were down more than 25 percent, which is good news for buyers. The area remains a prized luxury refuge and lower prices open the door for newcomers to enjoy one of the most unique locations in the U.S.

Sarasota, Florida

The city’s iconic waterfront is being reimagined with a vision to increase cultural programming and urban amenities. Median prices have been increasing steadily, up 25 percent since 2014. New construction means more inventory with more on the horizon. Agents report steady and growing interest in individuals from high tax states.

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Seattle, Washington

Happier times are ahead for buyers in Seattle with active listings up by 41 percent. Even though inventories are still slim, it’s a good indication the frenzy is over. Closed sales in November were down 28 percent. Homes continue to appreciate but the increase has slowed to 5 percent. For buyers and sellers this is definitely a market to watch. The city still is in top groups in many rankings, but the frenzy is over.

Wikimedia Commons / Jeff Gunn

Toronto, Canada

Canadian Baby Boomers and Millennials came together and turned up the heat on the luxury condos in 2018; single-family home sales decreased by as much as 44 percent. While the foreign buyers tax has reduced sales to overseas buyers, it’s also opening new opportunities for locals. Local buyers will continue to drive demand for condos here.

Resort Markets

Luxury’s top performers in 2018. Not only are residences in demand, but new resorts are raising the bar for luxury and reinvigorating current markets. New developments in Turks and Caicos, including the ultra-indulgent Gansevoort Villas, turn up the heat on interest in the Caribbean. Easy reach from the U.S. and private enclaves generate new interest in the Bahamas. Cabo San Lucas, Mexico is seeing new resorts and other regions along the Sea of Cortez are seeing new development. Mandarina in Nyarit is the site of One & Only’s first collection of private homes. Owning a private island continues to be an ultimate purchase and the Bahamas is ground zero.

Thanks to:

Austin Board of Realtors

Michael Saunders, Founder and CEO Michael Saunders & Company

Anthony Hitt, President and CEO, Engel & Völkers Americas

Aleksandra Scepanovic, Co-Founder and Managing Director of Ideal Properties Group

National Association of Realtors

Northwest Multiple Listing Service, Kirkland, Washington

RE/MAX  Canada

Trulia

Zillow

This story originally appeared in the Winter 2019 issue of Unique Homes Magazine. 

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An Equestrian Legacy

Follow the Poplar trees along the long driveway of the manor featured on our cover, and you arrive at a perfectly executed example of Georgian architecture. Surrounded by gardens, fruit trees, pastures, a riding arena and a six-stall barn, it could be mistaken for an East Coast hunt country classic, but this stunning estate occupies approximately 5.8 acres in Los Ranches Estates in Orange County’s Coto de Caza.

Inside, the residence represents the historical aesthetic but with a refined and decidedly Southern California interpretation. Spaces are sunny and airy with stunning appointments, premier craftsmanship and indulgent finishes. Here, new and old come together to create a home that is current but timeless.

A curved stairway with inset panels lends a charming flourish to a dramatic entry. Often treated as a fifth wall, the ceilings enhance the singular ambiance of each room. The library features a stunning fireplace and an ebony glazed wood paneling, intricate wood ceiling treatment and heavy iron glass doors opening to adjacent outdoor spaces. Walls clad with rustic stone lead to a subterranean wine cellar and tasting room.

The spacious family room with a detailed metal coffered ceiling, fireplace and French doors leads to a secluded garden with a fireplace, covered pavilion and outdoor kitchen. Formal living and dining rooms increase options for entertaining. A covered cabana adjoins the swimming pool. The architecture is significant and the interior spaces dazzle, but what makes this estate special is that it is as entirely-fenced total refuge. A separate guest house includes three bedrooms, two baths, gourmet kitchen and large deck. The six-stall barn with turnout includes tack, office and storage for grain and hay.

Mariann Cordova with Berkshire Hathaway HomeServices California Properties is offering this estate for $15.9 million, a price that reflects value more than cost.

This story originally appeared in the Winter 2019 issue of Unique Homes Magazine. 

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Future Perfect

Cities today are perched on the brink of a far-reaching transformation that will make tomorrow’s urban center radically different than today.

All over the globe, the groundwork for cities of the future is taking place in what Urban Land Institute and others characterize as “a wave of innovation that is already starting to transform urban areas.” Asia, China, Singapore, Japan and South Korea are all pursuing smart city initiatives, building entire metros from the ground up. Elsewhere, projects might be more modest, limited to a section of a city or addressing specific challenges, but they are no less visionary. In North America, concept cities and neighborhoods are underway in Denver and in Toronto. Atlanta, Miami, San Jose, California; Portland, Oregon, and a growing number of metros are incubating innovative strategies to address traffic, gridlock, energy use, conservation, wellness, connectivity, safety and overall quality of life. On the forefront of all these projects are tech companies, including Sidewalk Labs, a subsidiary of Google’s Alphabet, Panasonic and AT&T, acting as catalysts for change as well as stakeholders.

What cities of the future will look like might still be uncertain, but a growing number of policy makers, government entities and private industries are working to clarify the vision.

Outside of Denver, Peña Station NEXT is beginning to take shape around the last light rail stop before the airport on 400 acres of farmland that developer L.C. Fulenwider Inc., has owned for decades. Initially, the plan for a light rail line connecting the city with the airport did not include a stop at this location, but Fulenwider worked with the city to secure one. “It truly was a public/private partnership,” says Ferd Belz, president of Fulenwider, a 114-year-old Denver company. The plan was to build a transit-oriented development at the site. At the time, Panasonic’s search for a place to construct a new technology center had winnowed down to Denver and another city. The tech company saw the 400 acres at Peña Station as not only an ideal location, but also as a blank canvas to develop, test and create the prototype of a smart city as part of its smart cities initiative.

“It’s a transit-oriented development, so we have all those components of life, work, play and walkability. With Panasonic coming onboard, we’re really trying to utilize technology and look to those that are transformative not only for our inhabitants but for the country and the globe,” says Belz, who sees the community as a “living laboratory.” Almost everything from air quality to ground temperatures and vibrations will be monitored, but most important, as in smart cities overall, will be the ability to process that data, respond to changes and use the information to enhance day-to-day life.

Renderings courtesy of Peña Station Next.

Central swaths of green studded with art, water features, walking and running trails, and bike paths are an essential ingredient designed to create community. Pocket parks, rather than parking or traffic, dominate the overall scheme of Peña Station next in this view. A drone’s eye view also shows extensive integration of solar.

The project builds on experience from the Fujisawa Sustainable Smart Town in Japan, a pioneering community of smart homes that combines energy efficiency, solar power and batteries. Panasonic led development of the Fujisawa microgrid by connecting town buildings to a central real-time energy network, which is critical when managing the demands of renewable tech and real-world needs.

Construction at Peña Station NEXT has been underway for a couple of years, with completion slated for 2026. Already in place is Panasonic’s 112,500-square-foot operations and technology center, along with 1.8 megawatts of solar panels, part of a solar microgrid tied to 1.5 megawatts of battery storage and backup to store excess energy generated when solar gain is high (and then distribute that energy later when solar production slows). National recognition for the Peña grid includes the Environmental Leader 2017 Project of the Year award.

At buildout, there will be approximately 1.5 million square feet of office space, 500,000 square feet of retail and 2,500 residences. Autonomous shuttles will transport residents between offices, residences and the rail stop. In the future, Belz also envisions these shuttles going to other neighborhoods in the area. Currently, Fulenwider is working on plans for an entertainment district as well as a wellness component. This past spring, Colorado developer McWhinney broke ground on a Hyatt Place hotel.

Peña Station also underscores what most experts say is crucial for future urban development: the importance of collaborative relationships that bring together public and private entities along with a myriad of local stakeholders. Energy company Xcel is also participating in the project, along with the city and county of Denver, Denver International Airport and battery storage integrator Younicos.

Photo by Nicola Betts.

Giant screens and event lawns bring new uses to urban parks.

Mike Zeto, general manager for AT&T’s Smart Cities and emerging IoT solutions, says the key to change in current cities is the creation of an “ecosystem” of both large technology companies and smaller ones. “From a public/private partnership perspective, you can have a partnership that’s from one company in the city or multiple companies in a city that allows you to pull all the solutions together and then come up with unique ways to fund them, whether by each company participating or by the city being able to take some of that data and being able to monetize that data that’s anonymous and aggregated,” Zeto adds.

LED streetlights are essential to Peña’s infrastructure, and LEDs with a digital component — including controls, cameras and an array of sensors — are becoming the backbone of smart urban networks. For cities looking to transition to the future, Zeto says, most “are starting with lighting, because that is the one thing that is ubiquitous across the city.” Vertical infrastructure is top priority because it saves money, increases efficiency and promotes safety. Second is intelligent transportation systems and traffic, and, Zeto says, water conservation is the third focus for cities.

How intelligent lighting is employed also underscores the utility of the Internet of Things. In Atlanta, for example, AT&T Smart Cities partnered with Georgia Power, deploying intelligent LED lighting with a digital infrastructure that includes multiple cameras, environmental and audio sensors. The integration allows the use of the cameras for public safety, but also to gather traffic data and information which can be used to create efficiencies, lessen congestion, reduce fatalities and enhance planning for pedestrian and bicycle safety. Parking can also be monitored. All the sensors and digital capabilities are embedded in the lights, which Zeto characterizes as “smartphones for municipalities.”

Wavedecks, such as the one featured here in Simcoe, are signature features along Toronto’s waterfront.

Also essential from AT&T’s perspective, according to Zeto, is ensuring “we are creating inclusive societies using technology strategically. So, not just the nice areas, if you will, but the underserved areas as well. We need to make sure that we are spreading the investments, so everybody has the opportunity to benefit.”

Panelists at Urban Land’s 2018 Asia Pacific Summit agreed the human element is crucial to the design of smart cities. “We want to promote freedom, equality and participation; the smart city ought to be liberating,” said Doshik Yang, director of the Centre for Future Waterfront City, the master planner for Busan Eco Delta City in South Korea, which will house 80,000 individuals.

Approximately 85,000 residents are projected for Town Square, a new community about a half hour from Dubai developed with the objective of providing housing for middle-income earners. What sets this plan apart is the premium placed on social interaction and engagement in a community with a substantial diversity of residents. Ways for residents to connect with each other and with nature were significant considerations for Bassenian Lagoni Architects of Newport Beach, California, who designed the overall plan. Central to the mixed-use community is a half-mile-long central green space that includes jogging paths, skate parks, water features, multiple parks, a giant screen for outdoor movies, and is surrounded by retail establishments, restaurants and residences in mid-rise and high-rise buildings.

The human element is also fundamental to the vision for Quayside, a new community rising on Toronto’s Eastern waterfront on Lake Ontario. The objective for Quayside is to blend cutting-edge digital technology, cleantech and advanced building materials with human-centered urban design. Touted as the world’s first neighborhood “built from the Internet up,” Quayside is a collaboration between Sidewalk Labs, a subsidiary of Google’s Alphabet, and Waterfront Toronto. Connectivity, according to Sidewalk, will be integral to its foundation. Not only is this project a public/private effort, but a number of local groups, citizens and nonprofits have been invited to participate in the process. Like other visionary designs, public spaces including bike paths and pedestrian ways are essential to the plan, which also features an adaptable mix of building uses and amenities. According to Sidewalk, the neighborhood will also be the site of a new urban innovation institute, a campus devoted to solving the toughest issues facing cities.

Innovative modular construction is expected to produce lower-cost, quicker-to-build structures that can adapt to a variety of future uses, residential or commercial, and changing family dynamics. Some suggested plans envision walls that can be moved or repositioned.

Early visions also call for a thermal grid that taps multiple existing sources of energy for circulation and reuse, making it possible to heat and cool buildings without fossil fuels. Sidewalk expects to capture enough renewable energy through an advanced microgrid to meet Waterfront Toronto’s goals for onsite power generation.

Sidewalk will adopt Passive House building standards that go beyond LEED. Another pilot will be a smart disposal chain in multifamily buildings that consists of sensor-enabled waste separation for recycling and onsite anaerobic digestion for composting. Also, plans call for piping that will facilitate the reuse of graywater. 

It’s hard to see change happening until widespread adaptation makes you realize the future is now. Until then, as all these test cities come to fruition… practice makes perfect.

Corktown Common is another infrastructure collaboration of Waterfront Toronto. The 16-acre park, constructed on a former Brownfield site, is a verdant oasis that includes a marsh and woodlands along with trails for walking and cycling as well as settings for sports, public art, and a multi-function pavilion. Play areas include interactive water features.

Photos courtesy of Sidewalk Toronto.

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Pouring with Panache

Rather than an adornment to elevate a table, those in the business see stemware as an instrument to convey the wine’s message.

Anyone who inherits even a modest collection of vintage crystal is often surprised with the variety of sizes and shapes, especially if the collection dates from an era when fine wine was a privilege of a limited few. Vintages were served with elegance, while common table wines might only merit a jelly jar.  

Today everyone wants to pour with panache no matter the cost of the wine or whether the event is a backyard barbecue or a black-tie soiree. “Even if people are not wine drinkers, many still want to have a good set of all-purpose glasses. Nobody thought of that 25 years ago, even 10 years ago,” says Jay Buchsbaum, executive VP marketing and director of wine education at Royal Wine Corp.

RIEDEL PERFORMANCE SHIRAZ

RIEDEL PERFORMANCE CHAMPAGNE

RIEDEL PERFORMANCE SPIRITS

What’s considered an acceptable vessel can range from a basic tulip shape that works for both reds and whites to a growing number of silhouettes designed for specific varietals and grapes. Claus Riedel was one of the first to recognize the effect of shape on the perception of wine and spirits. In the 1970s, his eponymous company introduced glasses based on the character of the grape. Today, Riedel continues to innovate, introducing collections designed to enhance the experience of a range of varietals and grapes, including New World wines.  

“It’s all about physics,” says Gabe Geller, top sommelier at Royal Wine Corp. “The bowl of the glass is designed with the surface area in mind. Red wines generally need to breathe, so a fuller, rounder bowl with a wide opening suit them best. Whites stay cooler in bowls that are straighter on the sides.” Rosés can be served in white wine glasses, but there are also glasses with shorter bowls that are slightly tapered with a flared rim for the best experience. “The rim affects the way you sip. The flair helps direct the wine directly to the tip of the tongue,” says Geller.

A wine glass’ architecture includes the base, stem and bowl; variations in the bowl define the experience.

“It’s all about physics,” says Gabe Geller, top sommelier at Royal Wine Corp. “The bowl of the glass is designed with the surface area in mind. Red wines generally need to breathe, so a fuller, rounder bowl with a wide opening suit them best. Whites stay cooler in bowls that are straighter on the sides.” Rosés can be served in white wine glasses, but there are also glasses with shorter bowls that are slightly tapered with a flared rim for the best experience. “The rim affects the way you sip. The flair helps direct the wine directly to the tip of the tongue,” says Geller.

Photo courtesy of the Royal Wine Corp.

“The truth is it can be as simple or as complex as you want it to be. The varieties are endless,” shares Geller. “A good universal wine glass is perfectly suitable for anything, from your summer afternoon Ramon Cardova Rosado to a vintage Bordeaux such as Baron de Rothchild Haut-Medoc.”

Stemmed vs. stemless? In part, it’s a matter of preference and utility. The absence of a stem does “not change the ability of the wine to show its best in terms of aromatics and flavor. The same swirling and the same tapered top that is necessary for a wine to show its best can be duplicated,” says Buchsbaum, who does have some reservations regarding the ability of a stemless glass to maintain proper temperatures.

Photos courtesy of Riedel, from the Flickr account of Bettina Lorenzoni.

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Cover Showcase: Camden Maine Arts & Crafts Masterpiece

Improving on excellence is not easy, but Overlook in Camden, Maine (featured on our cover) elevates already significant architecture along with 21 stunning acres perched above a desirable stretch of Maine coastline to an even higher strata.

 

By Camilla McLaughlin

Inspired by the iconic Gamble House in Pasadena, California, this home is a prime example of the Arts & Crafts style but interpreted for the 21st century.

As with many contemporary designs, the open concept entry showcases the views of Penobscot Bay and the islands beyond from the moment you step inside. But then the finely-crafted details in the millwork and joinery, and the world-class stained glass are all reminiscent of the more traditional designs of another era, a hallmark of Arts & Crafts design.

 

There’s a sense of peace here that exudes from the many ponds and waterfalls, and more than 5,000 specimen trees and plants set against the forest and mountainside. Inside and out, you are surrounded by the colors of nature. “The feeling of the house is one of extreme warmth and comfort. There is a purity of design with great value placed on organic materials and artisan-crafted workmanship that melds beauty with utility. There is a wonderful intimacy in the house and the property. This is a place you never want to leave,” says listing agent Scott Horty, with Camden Real Estate Company.

 

With a full complement of amenities (a large theater/cinema, a game room, a gym, sauna, and an equally wondrous guesthouse) along with the extensive infrastructure (geothermal heating and cooling, whole house generator and solar array hidden among the trees) you may never have to leave!

 

Beauty, peace of mind and connection to nature are all priceless. But the price of Overlook is $7.9 million…

This originally appeared in Unique Homes Fall 2018

 

Click here to view the digital edition.

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Keeping It Real

10 Years Later
Our year-long look at what’s changed in U.S. luxury real estate since the 2008 recession.

 

When it comes to architectural styles and design trends, authenticity — not opulence — is what consumers want today.

Contemporary … modern … innovative … intentional … authentic … flexible … sum up residential real estate today. During the recession and early recovery, expectations focused on the “new normal,” what real estate and life, in general, would be like following such a seminal event. But real change is often subtle yet inexorable, and that is the story of residential architecture and design over the last 10 years.

 

After almost a decade, the much hyped new normal has finally arrived. Almost suddenly, it seems everything — architecture, design, outdoor connections, consumer attitudes — has been revamped in ways that entirely transform luxury homes. “It’s not just about how beautiful the building is, but what’s the experience. That’s a big evolution from where we were pre-recession,” observes Bruce Wright, AIA, vice president and principal at SB Architects.

 

Architecture

 

“Before the recession, I would say of the 60 to 70 homes we design a year, we would get one contemporary request and maybe a transitional request from clients. Now it’s flat-out contemporary. We’re talking flat roofs, pools on the roofs, outdoor screened rooms up on the upper levels,” says

 

Michigan architect Wayne Visbeen, AIA. “The resurgence of mid-century modern has also been a big, big part of our business.” Even when clients want homes that reflect regional architecture and connections, he says, “it’s with a contemporary edge, definitely with more simplicity and less frou-frou.” Visbeen’s firm works in 48 states and 10 countries, and he sees the move toward contemporary, notably a warm contemporary, playing out nationwide. Also in demand, even in locations as diverse as Beverly Hills and Miami, is an interpretation of contemporary dubbed “modern farmhouse.”

 

In the South, Stephanie Gentemann, AIA, a partner at g2Design in Savannah and director of Palmetto Bluff’s design review board, a transitional aesthetic, which she sees as a blend between contemporary and traditional, is gaining prominence. Gentemann also sees modern farmhouse garnering interest. Preferences for contemporary, transitional and modern farmhouse are not restricted to upscale homes, but range across all age groups and income levels.

 

For luxury, Gentemann says, “The more expensive the house, the more eclectic we get in terms of architectural style. There isn’t one predominant style that I see that is dictated by price point.”

©2018 Ciro Coelho / CiroCoelho.com

“What we see now is driven by a better- educated consumer. We’re seeing an appreciation for contemporary architecture with a warm material palette that is accessible and friendly, but not thematic, that is not an interpretation of another culture. It’s really about creating this kind of transparency, layered architecture that has rich materials and more materials communicated in a more contemporary format,” says Wright.

“I think it’s an interesting place where we are design wise,” says Ken Bassman of Bassman Blaine Home, who helps owners turn Montage residences into dream homes in Maui. “People want things to be more streamlined, clean and neutral. But it doesn’t mean that it’s bland or boring. There’s actually more color with artwork,” pillows and accessories. Wall coverings are back along with textural finishes and even a touch of glamour.

 

On the Big Island, designer Gina Willman says, “everyone is looking to ‘lighten and brighten’ their surroundings. We are lightening up walls by plastering or painting with hues significantly brighter than the ‘50 shades of beige’ phase of the 2000s. New homes are exploring lighter wood tones and cabinets.”

Revamped Interiors

 

Exterior architecture and elevations are only one transformation for homes. Inside, floor plans are being revamped as interiors undergo substantive alternations. “If I pull out a floor plan from 10 years ago, it would seem like a total disaster. There are things we would never do now,” shares Chris S. Texter, AIA, a principal at KTGY Architecture + Planning.

 

Open floor plans continue to define interiors. Living rooms are passé, often replaced by smaller rooms owners can configure however they want. And the jury is still out on separate dining rooms. James Rill, principal of an eponymous Washington, D.C. architectural firm, says dining rooms are often designed for alternate or dual uses such as a library.

 

Open plans are evolving to be more functional and nuanced. The intentional piece in open-concept design, observes Chicago designer Mary Cook, is the way these spaces are “high-performing, multitasking and they share their functions across rooms. People want the spaces to live better; they just don’t want to fill empty space.”

A variety of materials, warm hues and stone are contemporary hallmarks as shown in the Marmol Radziner designed inspiration home at Ascaya in Las Vegas.

 

Photo courtesy Boulderback 5.

Currently a dining room, this space is equally adaptable as an office, studio or play area. Pocket doors add to this versatility without interrupting the flow. 

 

©David Tonnes dba. PanaViz Photography / Courtesy of Ken Bassman

Open to Innovation

 

Even in large homes, Visbeen says his firm looks for opportunities for more creative uses and more innovation. “If I had to say anything was the real trend, it would be innovation for us.”

 

“Creating spaces where the kitchen, living and dining all seamlessly merge together supports a more contemporary style of architecture,” Wright explains, adding, “we are doing it on a grand scale, but also in an intimate way to help support the cadence of a daily routine.”

 

Kitchens, particularly in upscale homes, capture even more square footage. “People are spending a lot more money in their kitchens,” says
Pamela Harvey, owner of Pamela Harvey Interiors in Washington, D.C.

 

In lieu of luxury mainstays such as Wolfe or Viking, many opt for even higher-end appliances including La Cornue, AGA and Bertazzoni. Colors are another growing preference for both cabinetry and appliances. And clients now want range hoods to be powder coated to match the cooking appliance. What’s trending for colors in kitchens is dark blue, Harvey adds.

 

Pantries are back and are more like those from 100 years ago. “Pantries are taking on a life of their own,” says Texter, referring to the need for more storage along with additional functionality in kitchens. Open-concept designs mean the kitchen is always on display, so back kitchens or a second kitchen area tucked out of the way (once a nice-to-have amenity) are now a luxury “must-have.”

 

They can range from an expanded pantry with additional counter space to corral counter clutter to a fully outfitted butler’s pantry, which at the highest price points might morph into a full-on catering kitchen.

More square footage is devoted to kitchens and pantries.

 

Photo by Stacy Zarin Goldberg / Courtesy Pam Harvey Interiors

New Connections

 

One of the most transformative changes in floor plans, the orientation of kitchens and great rooms and the experience of the home overall, comes from the way interiors now relate to the surrounding landscape. “Outdoor living spaces are an enormous part of our business and have been for years, but it has taken an even greater level,” observes Visbeen.

 

Ten years ago, outdoor living referred to patios, gardens and decks. Today, thresholds are blurred, and the division between inside and outside is almost nonexistent. “It used to be enough to have a sliding glass door or a French door that went to the backyard. And now it’s about how that indoor space expands and takes advantage of the fenestration. Then, there is the desire to have a room outside, and that wall just disappears, and the space doubles in size,” says Texter. “Now we’re practically designing the backyard to go with the home. That space is part of the home, and the design is integral.”

 

New technology is also a catalyst for this transformation. The cost of large windows and disappearing doors is much lower than before the recession. New products include more sizable expanses of glass, broader doors, doors that pivot, and windows and doors that wrap around corners, greatly expanding options to integrate inside and outside areas, visually and literally. Having sightlines that directly extend to an outside patio or room visually expand smaller rooms.

 

Metal frames also mean less weight and larger panes of glass, according to Rill. In traditional homes, renovations and additions almost always address the indoor/outdoor synergy. Rill says they use metal framed glass more frequently and, in some rooms, disappearing doors are replacing sliders and French doors. “People are moving toward something that’s a little sleeker, a little cleaner and a little more playfully modern, but still within traditional proportions and shapes.”

Today, thresholds are blurred, and the division between inside and outside is almost nonexistent. 

 

©David Tonnes dba. PanaViz Photography / Courtesy of Ken Bassman

Authenticity, Not Opulence

 

A decade ago, luxury homes were often considered a testimony to status, and ostentatious demonstrations of affluence were acceptable. “During that era, it was in vogue that the more money you spend, the better it was. And after the recession, people came away from all of that. That heavy, goopy, layered, gilded aesthetic just evaporated. There was this yearning for authenticity,” explains Cook.

 

“Because of knowledge and images and travel that people are exposed to, they are more willing to be authentic to what they want instead of what is considered the norm. Also, people are moving away from that and it’s become more about what they want in their home and how they want their home to feel,” says Harvey. “They want their home to reflect who they are, whether they have a designer help them get there or not.”

 

Are homes getting smaller? Yes and no. Overall home sizes have seesawed since the recession, according to data from the National Association of Home Builders, but designers say how a space functions and is finished trumps size. “People are rightsizing more, so we’re seeing higher-end finishes in smaller square footage and the desire to use rooms more efficiently,” says Visbeen.

 

Rightsizing might be a trend, but signs that home sizes are beginning to creep up — especially for luxury properties — are prevelant. Since the recession, Gentemann sees the range of home sizes expanding. “Not only are there smaller homes, but larger homes as well.”

 

What has changed is the way additional square footage is used. “As square footage is going up, the walls are coming down and those spaces are opening up to each other. So those core areas where people come together are most important; I think what’s driving that is the casualness of life today and wanting to be able to come together,” explains Cook.

 

“People are looking for a graciousness of space, which is different than size,” says Ann Thompson, senior vice president of architecture and design at Related Midwest. “Consumers are very savvy now in a way we didn’t see 10 or 15 years ago. I think people are much more cautious and careful in their decision making. They are really assessing value.”

 

In the higher end, the more affluent the buyer, the more astute they are. “These are people who are very accomplished in their own field, and often that means they’re great decision makers. They’re researchers; they educate themselves about things in their life that are important to them and certainly their home is one of the most important decisions that they make,” shares Thompson.

 

Homes Are Resorts, and Resorts Are Homes

 

Increasingly home is seen as a refuge, a place to regroup and connect with families, which means primary homes are becoming more like resorts. Following resort trends, wellness is growing as a desired attitude, which means exercise spaces, a high level of air and water purification, steam showers and saunas are all desired amenities. “I think the overall trends in hospitality design and high-end residential continue to be largely influenced by travel, social media and the accessibility of high-end design that is reaching the consumer in general. There is a continual elevation of expectations,” shares Wright. On the other hand, second homes are becoming more like primary homes, with larger master closets and the addition of any needed features to equip the homes for year-round living. Offices are also another potential addition, as are larger kitchens.

 

Also, sustainable and energy-saving features, along with smart home technology, are no longer amenities. Rather, they are expected. Looking ahead, designers have a raft of features they see as most desirable. They include: hidden rooms, gun safe rooms, his and hers master baths, diverse wine storage areas, multiple detached structures, storm preparedness, backup generators, outdoor living on multiple levels of homes, and future elevator shafts. One innovative use in a Palmetto Bluff home, until the elevator is required, is to convert the space into a climbing wall, which keys into Visbeen’s observation that innovation might be the overarching trend.

This originally appeared in Unique Homes Fall 2018

 

Click here to view the digital edition.

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The “Auto” Mobile

Interest and research in driverless and self-parking cars is rapidly growing, as are ideas for how this technology may impact housing development.

By Camilla McLaughlin

 

The race is on among car manufacturers, tech companies and cities to develop reliable self-driving vehicles and required innovative infrastructure in what is being characterized as the third transportation revolution, one that possibly could have as dramatic of an impact as the automobile. Personal vehicles are only one facet of this future vision. Ride hailing services, shared ownership of cars, autonomous shuttles and buses, and self-driving trucks are all part of the scenario, along with Wi-Fi-enabled infrastructure and roadways that could charge cars. 

 

To illustrate how dramatic the transformation might be, futurist Jack Uldrich uses two photos of Fifth Avenue in Manhattan. In a shot from 1900, horse-drawn vehicles fill the roadway. Thirteen years later, only one horse-drawn vehicle is in evidence, and cars and trucks take up the entire street.

 

“The transportation revolution will be a game changer for most real estate sectors” is the prediction of Green Street Advisors in a report, The Transportation Revolution: The impact of ride-hailing and driverless vehicles on real estate, prepared for the Urban Land Institute’s fall 2017 meeting.

 

“Most experts agree that the automobile as we know it will be largely obsolete by 2030. In its place will be fleets of driverless cars that shuttle people safely and efficiently through our city streets. But it’s the broader impacts of this technology that are a game-changer for the future of our cities and the human experience. The opportunity is not only to create new places that accommodate driverless cars, but to reshape our existing cities and towns into the kind of amenity-rich, vibrant places that we all enjoy,” observed architect Andy Cohen, co-CEO of Gensler.

Although a vast array of regulatory and legal challenges need to be addressed, consumer acceptance is considered most pivotal to the broader adaption of autonomous vehicles (AVs). Right now, few consumers have tried self-driving cars. Experts agree acceptance will only come with knowledge and experience.

 

One analogy often used to illustrate current apprehensions about new technology is the elevator, which initially was considered an incredibly risky innovation. “People didn’t want to get into it. Today, you and I don’t give a second thought to jumping on an elevator, and it whisks us up a hundred stories of a skyscraper. I think that same thing is going to happen with autonomous vehicles. We’re just soon going to get in a car, press a button and it’ll take us to our destinations without our thinking of it,” says Uldrich, who says the impact of the elevator also gives insight into the effect of technology on luxury real estate. “Before the elevator, wealthy people lived on the ground floor, and they made the servants walk up the stairs. But with the invention of the elevator, the penthouse then become the most desirable space. And so, technology sort of changed behavior in a curious way.”

 

“For consumers, the tipping point for large-scale adoption will come when not owning a car makes more financial and logistical sense than traditional ownership. Car enthusiasts, the affluent, and rural households will continue to own cars as AVs evolve,” explains Rich Palacios Jr., head of research for John Burns Consulting. Still, real estate agents in cities with high levels of congestion such as Boston or San Francisco are beginning to hear comments from high-end clients that they are planning to reduce the number of vehicles they own.

Even though many well-informed experts weigh in with varied opinions on potential transformations for real estate and housing, the only certainty is the change will be incremental, disruptive and far-reaching. “So, what impact will AVs and ride-sharing have on the housing market? We think a big one,” says Palacios. “A portion of the money once allotted to owning/renting a car should also free up for owning or renting a home.” As cars become more of a commodity, rather than a possession, costs such as fuel, maintenance and insurance will disappear along with loan/lease payments. “The boost to disposable income will be significant, once scaled,” says Palacios. Increases in productivity for individuals as well as industry are another expected result that will drive economic growth.

 

When the price of a parking space can exceed $300,000 or $400,000, even high-end consumers begin to examine the value of owning multiple vehicles. Conservative estimates suggest demand for parking could decline by 50 percent or more, freeing up extensive prime acreage. Already, in cities such as Chicago and Philadelphia, some former surface parking lots are being repurposed as mixed use or residential towers. Not only will the need for parking near prime buildings be eliminated, but overall, individual parking spaces will be smaller because autonomous vehicles do not require space to open and close doors when parked.

Some parking garages today are being designed with future adaptation to office or residential purposes in mind. Speaking at Trends 2018 sponsored by ULI Arizona, Veronica Siranosian, senior project manager with the global architecture and engineering planning firm AECOM Ventures, said they are recommending building new parking garages with flat floors and higher ceilings with the potential for HVAC and electrical.

 

Other changes she anticipates include mobility hubs that would incorporate bike share, drop off and pick up, automated shuttles and perhaps access to transit in one location. Additionally, building and street design will also have to consider added spaces for pick up and drop off.

 

Since most autonomous vehicles will be electric, the number of gas stations will also decline, further unlocking acres of what Palacios calls “prime real estate.” This reclaimed acreage will also improve the supply of homes in locations where inventories have historically been constrained, possibly dampening appreciation and enhancing affordability.

 

For a while, new construction in cities or close-in locations might impact interest in real estate in outlying suburbs, but in the long run demand for distant suburbs will reemerge as consumers realize they can use the time involved with longer commutes productively.

 

Overall, most expect to see a continued revival of cities. “What I am most excited about related to self-driving vehicles is society’s ability to envision better uses of the all-public space that is currently devoted to automobiles. In the future, I believe cities will have more green spaces, public parks, wider boulevards, and, perhaps, more affordable housing because we will be able to convert our garages and parking garages into fully functional living spaces,” says Uldrich.

 

“Get ready for more homes per acre, with the days of wide streets, massive driveways, and two-/three-car garages a thing of the past,” predicts Palacios. Higher density might be one potential outcome for residential real estate, but for consumers the result will be more livable square footage.

While fully autonomous driving seems many years away, planners and developers are already rethinking how new development needs to be planned. “We’re already seeing apartment developers shifting to zero parking. Innovative master-planned communities such as Florida’s new Babcock Ranch (eventually home to 50,000 residents) are already utilizing AV community shuttles, with the goal of having on-demand AVs that individual residents can use via smart-phone apps,” says Palacios.

 

For current homeowners, unused garage space will offer a range of opportunities to add amenities or create new uses from live/work options to multigenerational spaces.

 

For an aging population, new transportation options will be a game changer with the potential to alter where and how they live. Most projections envision a growing number staying in their existing homes rather than moving to assisted living.

 

The transportation revolution also makes a bullish case for the repair and remodel industry, and adaptation of homes for aging in place is only part of the push for renovations. The conversion of garages will also boost this real estate sector.

 

Two years ago, the idea of self-driving cars seemed more like science fiction than a near-term possibility. Today, despite the first traffic fatality from an AV, the push to develop this technology remains strong. Major automakers including General Motors and Ford as well as Waymo (a unit of Google’s Alphabet), Lyft and others continue to actively pursue the technology for both cars and trucks. A majority of automakers are moving toward semi-autonomous vehicles. GM, for example, has added hands-free cruise control to their Cadillac line along with vehicle-to-vehicle (V2V) communication with similarly equipped vehicles that alerts drivers to disabled vehicles, sudden stops or a crash ahead. It’s also a good example of how autonomous vehicles will eventually communicate with one another as well as with infrastructure. GM recently petitioned the federal government to begin testing cars without steering wheels and pedals.

 

The National Transportation Safety Board defines five levels of vehicle autonomy. Current vehicles fall into levels 2AV and 3AV. One anticipated transition to fully autonomous vehicles at Level 5 is dedicated travel lanes enabling them to trail closer together and communicate with each other and infrastructure. Hypothetically, this scenario would facilitate the movement of traffic, but some experts hazard that AVs will only increase congestion.

 

California and Arizona are on the forefront of the transportation revolution, incubating new technologies including potential use without a driver in the car. In late January, Waymo got a permit to operate as a Transportation Network Company in Arizona, which allows Waymo’s fleet of driverless minivans to pick up and drop off paying riders through a smartphone app or website. Other states including Texas, Ohio and Michigan are also proactively working on AVs.

 

Any look ahead also requires a look back at predictions that went wrong, including one notable projection, pegging the number of cellular phones at the end of the 20th century at just under a million. For driverless vehicles, estimates of the time frame for adoption might not hit the mark, but few would deny that transportation’s future will not involve steering wheels and brake pedals. 

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How Luxury Home Buying Changed from 10 Years Ago

Appearing in UH Summer 2018, “Ten Years Later: Our year-long look at what’s changed in U.S. luxury real estate since the 2008 recession.”

Consumer sentiments toward owning and buying real estate continue to evolve, along with the definition of luxury.

 

By Camilla McLaughlin

Ten years ago, there were few signposts for the journey out of the recession. Real estate’s perfect storm got a lot worse in the summer and fall of 2008 as a combination of job losses, high energy costs, an ongoing tide of foreclosures, a pending presidential election and the near collapse of the credit markets rocked the economy. Many, but not all, upscale consumers put real estate plans on hold and shifted into a watch-and-wait mode. “Consumers’ confidence gets shaken, and the rich are not immune,” observes John Brian Losh, publisher of Luxuryrealestate.com and owner of Seattle brokerage Ewing & Clark.

 

Following that low point, luxury real estate embarked on a remarkable journey of recovery with luxury properties selling and prices escalating in many locations, boosted in part by the exponential growth of wealth worldwide. Just in the last year, the combined net worth of the world’s billionaires increased by 18 percent. Residential real estate remains a favored investment with prime property sales worldwide up by 11 percent in 2017.

 

Attitudes toward buying, selling and luxury overall have followed an equally transformative path. “The lesson from the recession is to buy smart. Impulse buying, overextending to get the home of your dreams, and buying without doing your homework have all gone the way of the fax machine,” says Jason Haber, a broker at Warburg Realty in Manhattan.

 

Value is most important. Greenwich saw two record sales in 2017, but only after list prices were reduced. In their luxury white paper, Christie’s International Real Estate reported strong sales “where buyers and sellers showed a willingness to adjust pricing expectation to new market realities.”

 

“Price was the name of the game,” said Michael Saunders of Michael Saunders & Company, noting that luxury homes in Sarasota sold in record numbers after homeowners adjusted prices.

 

Affluent individuals also have a new perspective on the investment potential of properties, locations for both primary and second homes, expectations regarding the agent’s role in the transaction and what constitutes luxury.

 

 

What Is Luxury?

Few other terms have been hyped more than the word “luxury” in recent years. Most industry experts would agree with Mike Leipart, managing partner of The Agency Development Group in Beverly Hills, who says, “It’s used so often that it’s become virtually meaningless.”

 

Even wealthy consumers struggle to find a suitable alternative phrase, yet they have a clear understanding of what luxury means today. “I think people can’t describe it, but when you walk into it, when you are standing in it, you respond to it,” says Craig Hogan, vice president of luxury, Coldwell Banker Real Estate. “People can tell quality; they can tell beautiful design. Service is critical.”

 

“Ten years ago, the luxury industry was able to dictate to consumers what luxury was and almost define it for them. We are not able to do that today,” explains Kevin Thompson, CMO of Sotheby’s International Realty Affiliates LLC. “Luxury is being viewed from an experiential perspective. People are choosing to live different ways and somehow have what they value. It is a very individual approach.”

 

“The meaning of luxury has changed a lot. I think luxury has become personal. It’s become a feeling. It’s become an emotional part of a real estate experience,” says Christina Huffstickler, owner of Engel & Völkers in Atlanta.

 

“You can’t pin it to price level or finish levels. It’s very complex. It’s very much what people are willing to pay extra for,” says Leipart using the example of how a desirable view — prized by today’s buyers — amps up a per square foot price. “I think the basic thing of luxury is that it is everything that has not been commodity priced,” he explains.

 

 

Value & Inventories

“By and large, people value home ownership,” shares Hogan. “I just keep watching this trend toward smaller and more wonderful. Just beautiful in every way. Great finishes, smart home technology, all the things you’d expect except beyond those expectations.”

 

“I think that people, wealthy people, have always found real estate to be an attractive investment. It’s an asset that usually appreciates that they can enjoy,” says Losh.

 

Coming out of recession, the Bay Area led the recovery, and the region continues to rack up amazing stats with May’s median sold price exceeding $3 million in both San Francisco and Silicon Valley, according to The Institute for Luxury Home Marketing. Inventories remain barebones with homes selling in weeks. In fact, the median time it takes for both attached and single-family homes to sell in Silicon Valley is about nine days. Here, as in many other upscale locations, the biggest issue is too few listings to satisfy demand.

 

“Even with interest rates rising because of the moves the Feds have been making the last 18 months, there is no slowdown in the appetite for wealthy consumers purchasing homes,” says Jim Walberg with Pacific Union, noting, he has never seen more all cash purchases in 35 years. “Buyers and sellers still view Bay Area real estate as a great place to put their resources. And, remember, these are wealthy people, so it’s not as if they are not diversified in many other investment categories.“ Many of these purchasers are looking at long-term ownership. The homes have a dual purpose: a fun community and place to raise their kids, and a home they plan to live in after their children are grown.

 

“The primary residence purchase remains largely emotionally driven based on finding the right property to suit the purchaser’s desire for location, space, finishes, et cetera,” rather than a cold calculation of investment dollars,” says Leslie Hirsch, an advisor with Engel & Völkers in New York City.

 

 

Second Homes & Investments

Second homes and resort properties are in demand. More than half of the world’s high- and ultra-high-net-worth individuals own two or more residences, and many sought out at least one luxury property acquisition in 2017 and 2018, say experts at Christie’s International Real Estate in their annual industry report.

 

Among the U.S. population with a net worth of $500 million and up, 2,700 own on average 10 or more homes each, shares Hogan.

 

“An interesting trend we have noticed is that more wealthy clientele are electing to purchase properties as investment pieces instead of purchasing a third or fourth home to use as a personal residence. Or in some cases they are using a single property as both a vacation home and income property,” shares Anthony Hitt, CEO of Engel & Völkers Americas.

 

“Second, third and fourth homes are now being scrutinized more carefully to make sure there is an upside in the investment should the purchase decide to sell in the future,” says Hirsch. Investors are diversifying portfolios, she says, “choosing to buy property in several countries as a hedge against a drastic change in one country’s economy.”

 

Affluent consumers continue to be bullish on real estate, an attitude enhanced by recent volatility in equity markets. Losh believes security and safety are more important to consumers. “People are also looking for a safe harbor. They want to feel safe, and they want their investment to be secure,” he says.

 

 

What Buyers Want

Ten years ago, the luxury echeleon was defined as homes priced in the top 10 percent of any market, and that benchmark still stands. But for consumers, dollar signs do not necessarily determine luxury. “Money sometimes doesn’t even become part of the search parameters. They just want to find the right property,” and these buyers today are willing to take their time, says Katie Hauser, a broker associate with Baird & Warner in Winnetka, Illinois.

 

Like many agents today, Hauser sees several different buyer profiles in the market. Some, particularly empty nesters, “want to ditch their suburban house for something unique. They want value, but they want to find the right place,” she says.

 

“There is a search for the unique. The emerging luxury consumer isn’t interested in cookie-cutter anything. They want personal and outside the norm and are willing to pay more for that,” adds Thompson.

 

On the other hand, other upscale buyers want a platinum location and are extremely discerning regarding every facet of the property.

 

“Luxury buyers in Omaha want what they want, and if they cannot find it they build,” says Judy Smith with RE/MAX Real Estate Group in Omaha. High on wish lists are rooms large enough for grand pianos, buffets and sideboards. “They still love walk-out basements for entertaining and as a separate living area for family members extended visits. The view from the deck is always important.”

 

 

Millennials

Millennials are beginning to make their play in real estate. Because they delayed buying a home, many of their first purchases fall into the luxury niche, giving new meaning to “starter home.”

 

According to research from Luxury Portfolio International, most buyers seeking $1 million-plus homes are 25 to 49 years old and have inherited or plan to inherit significant wealth. This consumer has begun powering the $1 million-plus real estate market, more so than their older counterparts.

 

Millennials overall, says Lindsay Bacigalupo, an Engel & Völkers licensed partner in Minneapolis, “waited to buy and are now in their late 20s and early 30s. They are buying starter homes that are $400,000 to $1 million.

 

Millennials expected to be as transformative for real estate as the baby boomer cohort was. “Millennials are the next generation who are redefining luxury. Their attitudes toward homes are shaping what is publically seen as ‘good real estate,’ influencing what others look for in a home,” says John Dean, license partner with Engel & Völkers Vancouver. “Millennials are rejigging real estate wish lists, which differ from past generations. They place a big focus on the shared economies. They prioritize modern design. They see real estate differently than predecessors as big traditional homes are too expensive for them to afford, at least right now.”

 

“Bigger is a little yesterday,” says Hogan, who characterizes current preferences among all consumers as “smaller and finer.”

 

The drive for a safe harbor along with quality of life, changing demographics, government tax policies and technology are all reshaping the geography of luxury. Denver, Nashville and Atlanta are new luxury players. Victoria, British Columbia topped Christie’s annual report as the primary luxury market. Santa Fe was the hottest second home market; Sun Valley and the Bahamas were in the top five.

 

More consumers are also opting to make places such as Charleston, South Carolina; Austin or Orlando home. A number are also trading their primary home for a resort home in locations such as Jackson Hole or Bluffton, South Carolina, and many are doing so with kids in tow.

 

“The definition of luxury means something different to millennials than previous generations. As we know, they value the experience of material wealth. They may choose to settle in traditionally second-home markets to be close to the beach or mountains. They are not as tied to a specific geographic area as many have the option to work remotely,” explains Hitt.

Technology & the Agent’s Role

Probably nothing has changed more, as well as stayed the same, as the way homes are sold and how real estate agents work with buyers and sellers. “Technology has played a huge role in changing everything we do now as agents,” says Dean.

 

Buyers are more knowledgable; the mechanics of the transaction are more streamlined. Artificial intelligence and virtual reality are starting to kick off the next tech evolution.

 

The agent’s role continues to shift from provider of information to trusted advisor. “Today’s buyer comes armed with data, comps, neighborhood analysis, and newspaper articles. In some cases they know more about pricing than the listing agent,” says Haber.

 

What agents need to understand, Leipart says, is, “you don’t sell anything” to the wealthy. “If your approach is to get them to buy, you are going to strike out every time. The best you can hope for is to be a trusted advisor, and you can’t have that role if you are trying to sell.”

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On Linda Isle

By Camilla McLaughlin

 

Seldom is a residence as spectacular as the setting, which makes the architectural showpiece featured on our cover a rarity. An address on Linda Isle is prized in Newport Beach, where only a select few homes sit directly on the bayfront and an even smaller number on an island. “Only a handful of these islands are guard gated, which makes Linda Isle especially desirable,” explains developer Zachary Eglit, president of BDR, Inc.

 

Expectations regarding architecture and design have never been higher than today. This custom residence is an ideal interpretation of Contemporary’s new aesthetic, which is warm, approachable and eminently comfortable. There is an integral sense of elegance and function that only derives from excellent design.

 

On the main floor, distinct spaces, including a designer kitchen augmented by a fully equipped butler’s pantry, and a great room, merge into an impressive open floor plan punctuated by a dramatic suspended glass staircase. The upper level incorporates a second great room. One of the four en suite bedrooms is also oriented to be a potential private office with fabulous views. White oak flooring enhances the sense of continuity between the two levels.

 

Expanses of glass bring in daylight and starlight. Blues of the water and dynamic panoramas are part of the experience. Disappearing doors make a seamless transition to outdoor amenities, including an outdoor kitchen, al fresco dining and a dockside patio. Aligned with current preferences toward slightly smaller but exquisite homes, this residence is spacious enough for a growing family but also manageable for a couple.

 

The Linda Isle community offers amenities including a private beach, but for this home the ultimate is onsite — dockside. With several slips, it can sit a vessel of up to 90 feet, ensuring ample room for a yachtsman’s toys. The experience is priceless.

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