All posts by Camilla McLaughlin

Through the Years: Generational Differences and Societal Change

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Generational differences drive so many societal changes, yet overgeneralizations about the wants and needs of large portions of the population can lead to costly misconceptions. One well-respected researcher is trying to unravel myth from reality.

By: Camilla McLaughlin

The new year is prime time for real estate forecasts and most experts look to the economy, stock market performance, job growth, the cost of labor and materials for insights into the future. Population trends figure into these recipes, but some experts contend the key to understanding what’s ahead for real estate lies in an in-depth analysis of changes in generations decade by decade.

“Sweeping demographic and generation shifts are quickly transforming America,” says John Burns in the introduction to Big Shifts Ahead, which takes a deep dive into generations and how they influence real estate. “Every individual and business feels the impact of government policies, the sharing economy, new technologies and rapidly changing societal norms. Many of the shifts make life better for some and worse for others. Those who understand and plan for the big shifts ahead better than others will win,” says Burns, whose research also contributed to a report from the Urban Land Institute (ULI), Demographic Strategies for Real Estate. From the growth of suburban communities that combine the most-desired features of urban settings with a small-town vibe, to the rise in demand for rentals, many of the trends Burns foresees are already at play, while others are just beginning to gain momentum.

For the last 12 months or more, Burns, CEO of an eponymous real estate consulting firm, and Chris Porter, his co-author and the firm’s chief demographer, have been on the road speaking at dozens of events including ULI conferences, spreading what could be considered the new gospel of generational understanding. The duo initially laid out their findings in Big Shifts Ahead, which was published a year ago.

Traditional demographic categories span an entire generation, a period that can be as long as 20 years or more.

However, such groupings do not always accurately reflect the behavior and attitudes across the entire spectrum of ages in a generation, as happened with a number of projections of Millennial behavior regarding homeownership and real estate. Burns points out that a 17-year-old high school senior has little in common with a 33-year-old father, even though by traditional classifications both are considered Millennials. Instead of continuing their early pattern of gravitating only to urban centers, as Millennials age, marry and have children, they are moving to more suburban settings.

Consider Gen X born from 1965 to 1983. In 2015, this group was 32 to 50 years old. Burns says the early members of Gen X purchased homes in the 1990s, while later members purchased in the mid-2000s and suffered more foreclosures than any other group through the Great Recession.

Instead of broad categories spanning an entire generation, Burns groups the U.S. population by decade born and profiles how the behavior of each cohort changes over time in response to outside forces. There is a surprising consistency to this method since the number of people born during each decade ranges from 40 million to 44 million. Even though population growth slowed by 8 million in the late 1960s and early 1970s, immigration compensated for the shortfall.

Burns points to four disruptors that impact behavior of those in every decade. In a presentation to planners and developers at ULI’s fall conference in Los Angeles, he characterized them as government policy, economic cycles, new technologies and societal shifts. For example, evolving societal attitudes have influenced each decade in different ways. Attitudes regarding women working and toward parenting changed and then changed again. The number of stay-at-home moms plummeted from 44 percent in 1974 to 23 percent in 2000. Those born in the 1970s, a group Burns calls Balancers, then reversed this trend. They also led a number of other societal shifts after 2001. Among this group, 23 percent were born in another country. Also changing are attitudes toward men’s involvement with child rearing with more fathers staying home today.

The economy affects jobs and the ability to buy a home, but a good or bad economy also leaves a deeper imprint. Burns says the growth of the economy during childhood and early adulthood determines lifetime spending habits. Net worth varies by decade. The group born in the 1950s is heading into retirement with $18 trillion, the most of any generation, according to Burns, who dubs this group the Innovators, because they led a technology revolution and started new companies at a pace that is still not matched, boosting productivity and longevity.

From mass production of cars to medical innovation to smartphones, technology also shapes generations, playing into where they live, the size of families, and the ways in which they connect with others. He calls those born in the 1990s the Connectors since they led 24/7 wireless connectivity.

At every level — federal, state, local — government has and continues to influence trends related to development and housing. After World War II, the GI Bill encouraged homeownership, and the federal push to develop interstate highways spurred suburban development. State tax and development policies to some extent determine where people live. In recent years, low state taxes have been one of several catalysts shifting the population toward the south. “Approximately 42 percent of America lives in Southern states, but 60 percent of the growth is going on there,” observes Burns.

This year, changes in federal tax law are eliciting greater scrutiny on ways in which policy changes might affect why and where people relocate, decisions on where to retire as well second and primary home purchases.

Since the recession, the level of homeownership has fallen, and Burns forecasts the rate of homeownership will fall to 60.8 percent by 2025, noting that anecdotal feedback suggests the homeownership decline could go even lower. He cites several patterns that will continue to put a damper on home buying. One he likens to a return to a version of boarding houses at the turn of the 20th century. 

“Inspired by Airbnb, a number of homeowners have told me they are bringing unrelated housemates as a source of income and not just for short-term stays. Homeowners and renters are meeting online. Mature homeowners need the income, and young adults need lower rent. While this is a great market-based solution to an affordable housing pattern, it has slowed household formations.”

More people —  not just potential first-time buyers —  are renting. Approximately 12 percent of Americans now rent a home, which Burns says is a “game changer.” Another shift, “renting from older Americans has surged in the last 12 years.”

Some want to try out a new location or environment; others need the cash. Some don’t use the mortgage interest deduction.

Also making renting an appealing option is the change in what’s available for rent. Many new multifamily buildings are more upscale with high-end finishes and a range of amenities. A cadre of new companies focus on creating newly constructed single-family homes specifically for the rental market, and it’s turning into a profitable business. Burns says, “several companies have shared that the yields in some markets are excellent. These builders and operators tend to have a long-term view toward building a steady, asset-based cash flow stream.”

Most experts anticipate that autonomous driving (driverless cars) will change where people live, and planners are already taking this into account. Some speculate that suburbs located farther from urban centers and jobs, which are typically more affordable, may be in demand again as commute time can be better utilized. Burns also suggests driverless cars will change attitudes regarding aging in place. He expects demand for assisted living centers will grow less than people think. Already, builders report an uptick in the number of individuals investing in renovations, so they can stay in their homes as they age.

The amenities that create status are being revised. Says Burns, “Experiences are the new brag,” which means a home’s walkability score or locations near activities might create value. “The best house is more likely to be near great things to do rather than a large home with a large yard,” he adds.

In terms of the long-term impact of some changes, Burns still has a lot of questions. For example, women now earn 58 percent of college degrees, compared to only 42 percent of degrees in 1972 when Title IX was passed. “Both men and women have a difficult time making sense of how this will change society,” he says.

If you are not familiar with the term surban™, it might be time to add it to your real estate vocabulary. Burns trademarked the term, and it is popping up in a number of conversations in the industry. Surban refers new areas that mix urban and suburban, often offering smaller homes with little or no yards in high population areas. Entertainment, restaurants, shopping are all nearby and walkable.

Expect to see more development shift toward the suburbs, including surban areas. Burns projects the suburbs will capture 79 percent of household growth over the next 10 years and urban growth to capture 15 percent.

The impact of the Connectors and Globals is yet to be realized, and it will be interesting to see the changes they bring to the way we live.

Photos courtesy of iStockPhoto.com

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Out of Orbit: Agents Aim High Pricing Ultra-Luxury Homes

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As the numbers climb into uncharted territory, one word emerges characterizing prices and properties at the pinnacle of residential real estate. “It’s a whole new stratosphere,” says Zachery Wright, executive director, Asia Pacific & Western North America for Christie’s International Real Estate.

 

By Camilla McLaughlin

Not too long ago, the possibility of even a $200 million home seemed outrageous. Today the most expensive home for sale in the U.S., dubbed The One, is more than twice that amount. Also off the charts is a square footage almost double that of the White House.

 

When the first issue of Ultimate Homes debuted in 2005, the most expensive residential property in the U.S. was $75 million. Today, $100 million doesn’t come close to the top 10 for Ultimate. Five properties are priced at $200 million and above, and anything below $138.8 million doesn’t make the cut. More than 50 are above $60 million. “Because we’ve seen so much wealth creation, these numbers don’t frighten many in the ultra world,” says Wright.

 

“It’s no surprise we are seeing such stratospheric prices today, because worldwide personal wealth is the highest it has ever been. Consider that the world’s population of $10 million-plus households is growing, and fast,” says Stephanie Anton, president of Luxury Portfolio International. More than 1.6 million households claimed a net worth of more than $10 million in 2016, a 91-percent increase since 2010. “If many of the properties on today’s list had come on the market even five years ago, it’s unlikely they would have been priced where they are today,” says Wright.

 

For potential buyers, lifestyle often justifies cost. “People will pay any price if it’s a prudent purchase. But getting there is a real shock. It takes a little while to figure out what things are worth,” says Gary Gold, executive director of Beverly Hills brokerage Hilton & Hyland. “There are very few people out there making sucker purchases. I don’t care how rich you are, very few want to be a chump.”

 

For most, getting to the $100 million level is a process that usually begins with a much less costly goal. Often, Gold says, buyers start in the $20-, $30- or $40 million range and discover those homes won’t meet their requirements. “They all buy what they want, the best thing available for their needs. In one of our big sales, the people were originally looking for an $8- or $9 million home. They ended up paying $85 million.”

2018 TOP 10:

1. $500 million
The One
Bel Air, California

6. $188 million
Billionaire
Bel Air, California
2. $250 Million
Chartwell
Bel Air, California

7. $175 million
Jule Pond
Southampton, New York
3. $250 million
220 Central Park South Penthouse
New York, New York

8. $150 million
Meadow Lane Oceanfront
Southampton, New York
4. $250 million
Mesa Vista Ranch
Pampa, Texas

9. $149 million
West Creek Ranch
Gateway, Colorado
5. $200 million
The Manor
Holmby Hills, California

10. $138.8 million
Gemini
Manalapan, Florida

 

Prices might be stratospheric, but what matters is often the same as it is for luxury buyers overall. “When they buy a house, they want to feel like they made a smart purchase, whether it’s a great buy or that they beat out somebody else. They want to make an intelligent purchase,” Gold explains.

 

The argument most often ventured by developers and brokers to justify heady prices is a comparison to the art world. Bruce Makowsky, developer of Billionaire — which at $188 million is No. 6 on our list — takes the analogy to the next level using mega-yachts as a measure. “If these guys are willing to pay hundreds of millions for a yacht that is a depreciating asset they use for four weeks out of the year, what would they be willing to spend for a land yacht?” he hypothesized.

 

Rayni Williams, also with Hilton & Hyland, is part of the team listing Billionaire. She says the land yacht comparison is appropriate. New mega spec homes are a complete package, taking the idea of turnkey to a new plane by including almost everything someone could want, and then some.

 

Billionaire is completely furnished, staffed and decked out with unparalleled amenities and features including more than 100 curated art installations, two stocked wine cellars, and a $30 million collection of cars in a custom display gallery along with a helicopter pad and one of very few residential theaters outfitted with Dolby Atmos.

 

“Spec homes are no longer developed with the intention of appealing to an entire market. With a specific luxury buyer in mind, developers are taking custom building to new heights with over-the-top features — and they’re in demand,” explains Jeff Hyland, president of Hilton & Hyland.

 

When owners of these homes come to Los Angeles, Williams says, “They want the ultimate entertaining home. They want to have parties for families and children alike. They want to have enough of the stage setting where they can have live bands…. They want that kind of space. They want a spa. If they want Botox, they don’t want to go to Beverly Hills to their doctor, they want their doctor to come to them.”

 

Days before this article went to press, a compound on Carbon Beach in Malibu sold for $110 million, setting a record for L.A. residential properties. The property wasn’t on the market — officially or unofficially — which in the ultra-world is not unusual. “When you have a highly qualified buyer, you tend to knock on doors, whether the house is for sale or not,” says Joyce Rey, executive director Coldwell Banker Global Luxury, whose sales over the years have established price benchmarks for the L.A. market. She says this recent sale is “a good indication of the strength of the luxury market in L.A.”

 

Another descriptor frequently applied to ultra prices is aspirational. Even though these properties do sell, eventual prices are often substantially less than the initial offering. Still, they set new benchmarks. In recent years, transactions shattering price thresholds include a $147 million East Hampton estate and Copper Beech, a $120 million waterfront property in Greenwich that sold in 2014. In L.A., the $100 million threshold was breached in 2016 with the sale of the former Playboy mansion.

 

“The sky is the limit. Once we hit the $100 million mark, we broke the glass ceiling — and we’re seeing home buyers comfortable with spending more than that,” says Rick Hilton, chairman and cofounder of Hilton & Hyland.

 

Continuing this year is a subtle geographic tilt toward California and Los Angeles. “People are showing a willingness to spend in the West. We’ve certainly got global wealth in New York. I think we’ve got a stronger market right now than they do in New York. Anyone who is making a lifestyle decision is going to be looking at Southern California,” says Wright.

 

Ultra properties built on speculation get the most media attention (who can resist writing about a candy wall or jellyfish room, one of the amenities of The One), but what sells depends on availability and the mix of buyers at a given time. “There happens to be a lot of spec homes out there at the moment. People are building these amazing houses, so they happen to be available. And they’re trading. These houses weren’t available in 2016 to the same degree,” says Gold.

 

Still, land and location convey the most value and the top 10 always reflect a mix of locations and property types. Gemini in Manalapan, Florida, extends from the ocean to the Intracoastal Waterway. Chartwell in Bel Air is a legendary estate with historical ties. Built in 1933 by architect Sumner Spaulding and restored by Henri Samuel, whose work includes estates owned by the Vanderbilts and the Rothschilds, Chartwell occupies 10.3 acres and is often described as the “the crown jewel of Bel Air.”

Views top the list of ultra attributes buyers consider most essential. Chartwell offers sweeping panoramas of the Pacific and downtown L.A., as do others including The One and Billionaire. 

In New York City, dynamic views are part of the value equation for ultra properties. This year, only one Manhattan property finds a place among the top. Occupying four floors in the Robert Stern-designed 220 Central Park South, the residence easily could be considered the Ultimate penthouse. The $250 million price is a record for Manhattan and few other residences have been as large.

 

Property sizes range from just over an acre to 65,000 acres on Mesa Vista ranch in the northeast corner of the Texas panhandles. Like many Ultimate properties over the years, this ranch has been a labor of love, husbanded over most of a lifetime. “When I began assembling the ranch 46 years ago, I initiated a multi-decade program to help the land heal and over time invested millions on wildlife management,” explains owner T. Boone Pickens. Improvements also included 20 lakes over the course of 20 miles. In addition to a 12,000-square-foot main lodge, the property includes a 33,000-square-foot lodge and several other houses, plus housing for staff. The chapel, a site for both weddings and funerals, is stunning, and a 6,000-foot runway and hangar facilitate getting there. The ranch is priced at $250 million and, according to Pickens, much of the proceeds from the sale will be directed to his foundation. The property is offered jointly by Hall and Hall, and Chas. S. Middleton and Son.

 

A 60-acre estate in Bridgehampton, once placed at the top of the first Ultimate list, and one-of-a-kind properties continue to be a Hamptons’ hallmark. In 2014, an 18-acre property in East Hampton sold for $147 million, setting a record for the U.S. Many of these properties offer what many consider an idyllic mix — classic estate homes and a substantial amount of land, including frontage on the ocean or a pond and the provenance. The setting for Meadow Lane in Southampton, listed by Harald Grant with Sotheby’s International, is considered a trophy location. It offers 360-degree views and extensive frontage on the Atlantic across three lots, as well as an additional bay-front lot.

 

Commissioned and owned by the Ford family, Jule Pond offers the largest ocean frontage in the Hamptons with nearly a quarter of a mile on the water. Listed at $175 million, it is the most expensive property for sale in the Hamptons and No. 7 on our list. A complete renovation in 2008 preserved many original features, including molded ceilings with traditional chandeliers, Italian marble fireplaces, French parquet floors and antique bathroom fixtures.

 

Referring to the mix of the top 10, Rey says, “I think it speaks to a variety of interests. Some people are attracted to land. Some people are attracted to architecture. Some are attracted to views.”

 

As always, the question hovering over the market remains what will sell next and what will be the next stratospheric price?

. . .

Where are they now? 
A look at what happened to the top of last year’s Ultimate Homes list.

2017

$250 million
Billionaire
Bel Air, California		 2018

Price decreased
to $188 Million.
Now No. 6. 
$200 million
The Manor
Holmby Hills, California		 No change.
Now No. 5.
$195 million
Gemini
Manalapan, Florida		 Price decreased
to $138.8 Million.
Now No. 10.
$175 million
Great Island
Darien, Connecticut		 Off the Market.
$145 million
La Dune
Southampton, New York		 Off the Market.
$140 million
Briar Patch
East Hampton, New York		 Off the Market.
$137 million
Il Palmetto
Palm Beach, Florida		 Off the Market.
$129 million
Palazzo di Amore
Beverly Hills, California		 No change.
Now No. 12.
$110 million
The Pinnacle Penthouse
New York, New York		 No change.
Now No. 13 (tied).
$100 million
Murray Compound Estate
Southampton, New York		 No change.
Now No. 15.

This article orginally apeared in the

Ultimate 2018 edition of Unique Homes. 

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French Romance: 33-Acre Estate Inspired by France

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Few estates can be considered a work of art, but arrive at the property featured on our cover and you find it takes a moment to take it all in. Ducks paddle in front of an antique millhouse next to a quarter-acre pond. Vine-covered bridges and stone paths twine among four cascading ponds. The setting is as idyllic as Monet’s gardens that inspired the landscape.

 

No matter where you are on this property, you are surrounded by beauty, along with blue skies and rolling mountain panoramas that comprise 360-degree views. Finding an estate so meticulously orchestrated is rare; even the hues of the roofs merge into a larger palette.

 

Inspired by the French Romantic period, the main house was completely reimagined three years ago when additional parcels were also acquired to transform the entire property into an ultra-private, 33-acre compound. Every finish is exquisite, superbly paired with the setting and endowing each space with a vibrant but balanced aesthetic. Even the kitchen, designed to evoke a French bistro and backed by professional chef’s kitchen, reflects the design inspiration, as do the parterre gardens and formal landscaping.

 

“What is especially remarkable about this property is everything you might not notice initially,” says Jordan Cohen, estate director for RE/MAX Olson and Associates in Westlake Village, who is the No. 1 RE/MAX agent in the U.S. The interplay between buildings and the land is dynamic but subtle. Off to one side lies an organic farm and orchard. From the main house, gardens and one of the two pools stretch out toward distant views. A pool house becomes the setting for an extensive spa including a Himalayan salt room. A second pool is adjacent to the 11,000-square-foot guest house.

 

Privacy and infrastructure were prime objectives in the creation of this property. The guard-gated entry road is part of the property and completely secure. A sagacious purchase of water rights, almost priceless in California, resulted in two municipal-quality 1,000-foot wells on the property. When viewed from the perspective of art, the $85 million offering price might be considered a bargain for a masterpiece of this magnitude. — Camilla McLaughlin

 

Photo courtesy of RE/MAX

This article orginally apeared in the

Ultimate 2018 edition of Unique Homes. 

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An "Off-Market World": Reflecting on Real Estate Changes since 2008

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The practice is not new, but the frequency and acceptance of pocket listings has grown.

By Camilla McLaughlin

Off market … private listing … coming soon. These phrases in high-priced markets characterize properties offered for sale, but not publicly listed in the traditional manner in the MLS. The way these listings are perceived has changed significantly in the last 10 years.

Even after the advent of formalized platforms such as the MLS, the most expensive properties were often closely held, giving rise to the term “hip-pocket” listing. Traditionally, in the industry, pocket listings have evoked concern that unscrupulous agents would keep them in house and pocket the entire commission.

Post recession, the number of pocket listings seemed to increase exponentially; most in the industry remained skeptical. Today, the terms “off-market” or “private” listing are often used instead of pocket, and, in a number of places, it is becoming an acceptable — some would even say savvy — marketing strategy.

“Now I’ve noticed it’s really changed and it’s a lot more accepted,” says Patrick Ryan, senior vice president and managing broker, Related Realty, Chicago.

“It’s certainly become a very big part of our market, and it’s not something we’re necessarily driving. We’re being led by what the sellers want,” says Chris Dyson with The Agency in Beverly Hills.

In a survey of members conducted by the Institute for Luxury Home Marketing (ILHM) for Unique Homes, an overwhelming majority, 97 percent of agents responding, said private listings were part of their market. A third indicated there were only “a few,” while 17 percent saw it as a growing trend.

“As I travel around the country training agents from a variety of other states, I hear differing opinions,” says Florida agent Tami Simms with Coastal Properties Group International in St. Petersburg, who is also a trainer for the Institute. “In some markets, it works in a positive way, and in some markets, it’s considered to be underhanded.”

In the ILHM survey, 38 percent of respondents agreed that industry professionals looked more
favorably on off-market listings. About a quarter disagreed with this statement, while 35 percent neither agreed or disagreed.

The latest twist in off-market properties are platforms and professional networks, accessible only to licensed agents, designed to facilitate the sharing of information. The Top Agent Network, a national affiliation of agents in the top 10 percent of the market, is a forum for premier agents to exchange information. Additionally, networks formed just to publicize off-market properties are popping up in hot market cities such as Austin.

In August, several agents from The Agency in Beverly Hills launched thepls.com, the Private Listing Network. In little more than six months, the network claims 600 active listings worth $3 billion. Approximately 5,000 agents have signed on to the service. “Information shared on the platform is information they already email to one another on a daily basis,” says Dyson, who founded the network along with James Harris and Mauricio Umansky of The Agency.

“We have always had off-market activity. However, I think it is even greater right now,” says Meghan Bach with Colorado Landmark, Realtors in Boulder. Not only have they become more common, but there is greater acceptance among consumers. “People used to think they were Realtor-driven and that the listing agent was trying to double-end the sale. This is very much not the case today. It is seller-driven,” says Bach.

Ask agents about off-market practices and responses vary by location. In Palm Springs, Lucio Bernal with Coldwell Banker Residential Brokerage says, “We typically do not see off-market as being common in the valley. Privacy does not seem to be an apparent issue here.”

On the other hand, in Los Angeles’ platinum locales, Bob Hurwitz, founder and president of Hurwitz James Company, says, “Off market, a.k.a. pocket listings, have become so popular that the terms are basically oxymorons. It is frankly ludicrous.”

Technology also plays a role in this trend. “There have always been pocket listings, but it’s a little more evident now because of our electronic world and the fact that information is so immediate and widespread. The truth is if a house is of any substance, it generally doesn’t remain private,” says Joyce Rey, executive director, Coldwell Banker Global Luxury.

Lack of inventory is also boosting interest in private listings. Boulder has seen 10-plus percent appreciation year-over-year since 2013; demand still far exceeds inventory. “Good products fly off the shelf, so having a pocket that brokers chat about, and get under contract fairly hassle-free is ideal for sellers, particularly in the high end,” says Bach.

In Atlanta, Jaime Turner and Heather Armstrong with Engel & Völkers find, “The shortage of inventory is worrisome to both buyers and sellers. Sellers are hesitant to list and sell without an identified home to move to. By using an off-the-market strategy, sellers are able to command a price that gives them the comfort of selling while they look for a home to purchase. Buyers like it because they feel like they are getting ahead of the curve and are able to see a home that has limited showings. It has also been a good tool for us because when we have a seller that is concerned with finding a home, we utilize our agent connections and resources to locate the right home for our seller.”

For properties not in a luxury price bracket, off-market might not be the right route. “In the lower end, anything below $1.5 million in our market, coming to market creates a bidding war and advantageous sales prices for sellers. The higher end, $2.5 million and up, sells word of mouth and pretty close to where initially priced,” says Bach. Even for high-end properties, she says, “I do see huge value in coming to the market and being broadly online. That said, when there are privacy issues — divorce, job transitions, health issues — off market makes so much sense.”

Desire for privacy remains a major incentive for sellers. According to research from Luxury Portfolio International, privacy has never been more important to wealthy consumers who are also concerned about identity theft.

This desire has fueled an increase in requests from high-end sellers asking agents to privately market their homes. “Sellers actually demand it more than a Realtor suggests it to them,” explains Ryan. “They don’t want to be bothered with people just going through the house. They don’t want it to be a museum tour, so they instruct agents to be strategic and not make property information available to the public.”

Some contend not being available to the general market potentially enhances a home’s cachet. “A lot of buyers want something that they officially can’t have. Anyone that can essentially offer something that not everyone else can have, has a unique value in itself,” says James Harris. “The reality is the less you can tell people, the more exclusive it becomes, and the more people want it.”

But restricting information about a property to a limited audience is not without risk. “It’s a two-edged sword for sellers,” says Rey. “Is privacy worth getting less money for their home? If they do not get wide exposure, they may not be getting the best price.” “It also defies logic,” says Hurwitz. “The more qualified buyers who can find a property, the more likely a sale. If a property is not visible to agents with a qualified buyer, they aren’t going to know about it and will sell something else they can find.”

“I also hear a variety of opinions. Some sellers like the idea of avoiding showings, open houses, etc. (for privacy and convenience) if they can get a price they’re happy with without listing on the open market. The opposing argument tends to be that not offering it on the open market isn’t working in the best interest of the customer if there could be better terms/conditions in a wider pool of prospective buyers,” says Simms.

Even those who express concern about this approach recognize there are situations in which not being on public platforms is a strategic move. Hurwitz has used pocked listings on rare occasions for celebrity clients who wish to remain as anonymous as possible.

“Sometimes certain types of clients are not really comfortable having lots of people come see a property,” says agent Jennifer Ames with Coldwell Banker Residential Brokerage in Chicago. In instances like this, Ames says she will do a marketing campaign directly to agents who work in this price bracket. Invitation-only previews of big, exclusive properties are a traditional avenue to publicize properties.   

Luxury properties often take significantly longer to sell than those priced close to the median.
According to research from Concierge Auctions, average days on market for the highest-priced properties in top markets hovers around 522 days, ranging from 55 days in San Francisco to 1,062 in Nashville.

Once a home is listed on the MLS the clock begins ticking on the number of days on market. “The way the market works in the U.S., if you go on the market everything has to become public. Not just the price and the address, but the days on market. The longer a property is on the market, the more detrimental it becomes for the property,” explains Harris.

Being on the MLS opens the door to inclusion on public platforms including Zillow, Trulia and many others. Along with days on market, changes in photography, prices, and broker representation are all tracked. “We’ve started to realize more and more with the Internet, you want to have all your ducks in a row before going on the MLS,” says Ryan.

“Coming soon” has become an official category incorporated into a growing number of MLS systems. “We see a lot of Coming Soon strategy as opposed to off market in Florida,” says Simms. “I believe that the off-market approach is more appropriate for properties that are particularly expensive and/or unique, which would likely end up having a tremendous number of days on the market if listed traditionally.

Initially offering a property off market is considered an effective method to test a price. “If you are trying to get a very aggressive number for your house, you may want to start off market to test the price,” says Harris. Agents also use this strategy when an owner has a much higher price in mind than the market will likely accept.

“It’s a way to test the market without going on record,” says Ames. Another circumstance that could call for an interval of off-market strategy, she says, is a situation where owners don’t actually plan to move for months, but still want to give the property exposure.

In the pre-Internet era, agents relied on phone calls to agents who worked in similar price brackets. But, “you could only call so many people and network so much,” shares Ryan. Today, robust CRM systems give agents a laser focus on most-likely buyers. Additionally, national brands and affiliate groups promote networking among agents both nationally and internationally.

More formalized networks and platforms such as thepls.com are a way for agents to keep track of what’s available. For example, in Los Angeles, agents might receive hundreds of emails a week regarding off-market properties. “The PLS is essentially a place where agents can put information, so it can be searched when another agent needs it. That was really the motivation behind it,” says Dyson.

Tried and true methods to ensure those who work in luxury are aware of new listings, both off-market and publicly listed, remain the most important marketing tools, particularly for well connected agents.

Will the penchant for private listings continue if markets cool? While blockchain reduce reliance on the MLS? Both questions point to variables that could affect the off-market trend in the future.

The “Market Maker”

“Market maker” is the way Robert Dankner characterizes what he does. Dankner, president of Prime Manhattan Residential, takes off-market to the next level by finding and creating opportunities for buyers and sellers in tight markets in New York City. “There are a lot of people looking for the same thing that doesn’t exist, which is why they’re all creating things for themselves,” he says referring to the boom in renovations.

Dankner sees market potential others often overlook and is equally skilled at bringing clients —buyers and/or sellers — together, crafting a deal advantageous to both. “In my world, off-market is something that not everybody can do. In addition to obviously being extremely well connected, you have to have a memory like a computer because as things arise on both sides of the equation, you have to be able to mix and match very quickly to see what can be put together. It’s just a matter of having the resources and tools to know where and how to hunt. There’s no algorithm, no smoking gun. It’s just a matter of understanding every nook and cranny from the standpoint of things that used to be on the market or understanding through connections who, what, why and where somebody might be willing to part with something under the right conditions.”

Photos courtesy of iStockPhoto.com

This article orginally apeared in the

Ultimate 2018 edition of Unique Homes. 

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Bahamas international sporting club encompasses paradise

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Usually, getting to a destination is the most difficult part of a trip; at The Abaco Club, an international sporting club on Winding Bay in the Bahamas, the hard part is leaving.

“Welcome to Paradise” is how David Southworth, founder and CEO of Southworth Development, greets newcomers here. Even before you reach your residence, via a personal golf cart, you already feel the sense of being in paradise building.

The setting is relaxed with low slung buildings and iconic Bahamian architecture surrounded by lush vegetation. In the background, turquoise waters sparkle and flashes of rose red can be spied as Bahamian parrots streak through the trees.

No matter your vision of paradise — golf, tennis, boating, cave diving and snorkeling excursions or just relaxing on two miles of pristine beach — this club has it all. The golf course, consistently rated No. 1 in the Bahamas, is a true Scottish-style links course set hard by the sea with classic links features including pot bunkers and sloping greens. Pros such as PGA champion Darren Clarke often use the extensive practice facility to perfect their short game.

The club setting, which restricts the number of visits from non-members, adds to the overall laid-back ambiance. Real estate offerings include cottages, estate homes and cabanas. Two new condo buildings are planned. Also, in the works is a second members’ clubhouse and dedicated boat slips at Little Harbour.

Divers worldwide come to Abaco to explore the blue holes and potentially the most extensive island underground cave system in the world.

Our visit to the island included a winding trip through a pine forest with the Friends of the Environment to visit Dean’s Blue Hole, the second deepest in the world. Another day, we explored the cays and harbors around the Sea of Abaco, where we swam with turtles and met the swimming pigs of No Name Cay.

Along the Winding Bay beach, the club’s waterfront director has a range of water toys including kayaks, paddleboards and snorkels at the ready, and special events are planned every day.   

Whether in the open air at Flippers Beach Bar or taking in the panoramic views from the relaxed elegance of the Cliff House, dining often turns into a convivial experience. It’s no surprise that Flippers’ signature drink is the Island Smile. Fish tacos at Flippers and fresh lobster at the Cliff House are favorites.

The last night of our visit was ribs night, one of the special events at Flippers, with live Shake ‘n Scrape music and a surprise visit from the island’s Junkanoo troupe.

Regretfully, we had to leave the next morning, but we carried with us the last exuberant notes of that night. — Camilla McLaughlin

Photos courtesy of The Abacos Club; Left bottom photo courtesy of Home ©Aaron Usher III

THIS STORY WAS FEATURED IN OUR SPRING 2018 ISSUE.

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Tech Crunch

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When technology experts compare the current pace of innovation behind the scenes in real estate to the Dot.com Boom of the late 1990s, it’s time to take notice.

By Camilla McLaughlin

Could another tech revolution for real estate be at hand? During the last tech surge, more than a few pundits speculated the agent would become increasingly irrelevant as technology took over most aspects of the job. Today, amid speculation about blockchain, artificial intelligence and other emerging technologies, whispers about the demise of the agent are once again surfacing. But experts say today’s next-gen tech will only make the role of the agent more relevant, particularly in high-value markets.

“Ultimately, relationships remain at the core of real estate, and today they are more important than ever,” observes Stephanie Anton, executive vice president of Luxury Portfolio International.

While attention in recent years has riveted on technology for the home, a wave of innovation with the potential to be even more transformative is on the cusp of altering everything from the way homes are marketed, to access to property data, to the execution of the sale. “We are at the tipping point of change

for real estate. Within three to five years, the entire property landscape will have shifted. Real estate search will be completely remastered, and the industry as a whole will not resemble what it is today,” says Joel Leslie, partner and CEO of Propify, a California startup that was developed in Australia.

The time frame for Leslie’s projection might be optimistic, but there is no doubt that the way properties are bought and sold will change in the not too distant future, perhaps even more dramatically than the mid-1990s when listings and property information became publicly available and searchable online. As a result, new brokerage models emerged; some remain, many do not — but the impact of technology on the way homes are bought and sold endures.

“Technology continues to transform the real estate industry, and particularly in the last few years as we have seen more and more true innovation introduced that can make agents’ lives more efficient, their tasks more automated and their time more effective,” says Stephanie Anton.

“An ever-complex sales process, record home values and elevated consumer expectations require agents to rely on a range of tools from contact management to virtual reality. “In the world we live in today, you truly have to be rigorous to keep up with the ‘latest and greatest,’” shares Anton.

Luxury sellers want “to see that an agent has the tools and wherewithal to expose their home to the buyer groups that have the most potential to purchase. They want to know that it’s being placed in the right places, where luxury buyers are looking. They also want to easily see the work that the agent is doing on their behalf,” says Tom Morgan, who heads up marketing for Gabriels Technology Solutions, a technology provider for luxury real estate brands. Productive agents rely on CRM or customer relationship management software to facilitate and streamline this process and provide detailed reports to clients.

Contacting an agent and discussing parameters of the home used to be the norm when someone decided to buy a home, says Bob Hurwitz, founder and CEO of Hurwitz James Company. Now, that initial contact usually happens after the buyer has done his or her own research on everything from available homes for sale to neighborhood statistics to online value approximations.

“The agent is still absolutely key though, as much of the information online, particularly ‘valuations’ from third-party aggregators, are ludicrous and inaccurate, based on incomplete or faulty data. Additionally, much sales data is not available as more and more listings are sold off market,” says Hurwitz.

Online searches, often on mobile devices, have upped requirements for how properties are presented online. “The days when a photographer would come in and shoot 20 photos are over. It is imperative that photography, VR [virtual reality] tours and video be absolutely of the highest level,” Hurwitz says. To take a unique property to the next level and make the property stand out, Hurwitz has hired an award-winning director to produce visuals.

Disruptive Technologies

When Matterport introduced 3-D technology to real estate imagery, it was a game changer. Once floorplans came off the page, it was possible to get a much better sense of the configuration of a property, and 3-D floorplans invite exploration. Now, pioneering newcomers are making 3-D technology less expensive and possibly applicable to a range of price points. “Apple investments suggest that soon, with the iPhone 11, you will be able to create such beautiful content using a camera in your pocket,” says Anton Yakubenko, co-founder and CEO of GeoCV.

GeoCV offers a high-quality 3-D immersive experience in both tours and floorplans. There is a “true sense of being with realistic depth and HDR [high-dynamic range] photo realistic quality,” explains Jonathan Klein, director of partnerships for GeoCV. “We differentiate ourselves by leveraging 3-D-enabled smartphones and taking an open approach to the data.” GeoCV’s floorplans and tours also include patios, porches and other outdoor connections, giving potential buyers a good idea of the indoor-outdoor synergy of a property.

“Technology continues to transform the real estate industry, and particularly in the last few years as we have seen more and more true innovation introduced that can make agents’ lives more efficient, their tasks more automated and their time more effective.” — Stephanie Anton of Luxury Portfolio International.

It’s A Virtual World

Virtual staging is not new. It was introduced in 2009, but the overall result was less than realistic. New technology means virtually staged spaces appear as real furnished rooms. “With dynamic 3-D augmented and virtual reality capability, buyers, sellers and real estate agents can eliminate visualization barriers using technology to showcase how a space will look fully furnished, but in a more scalable, convenient, cost-effective and personalized way than ever before,” says Pieter Aarts, CEO of RoOomy.

Virtual staging does more than act as a substitute for real furnishings. Some options allow viewers to change the position of a wall or windows. So, buyers can imagine how a property would look if, for example, the landscaping was changed or with a wall knocked out, explains Tim Rose, national sales manager for PlanOMatic, which offers virtual staging, interactive floor plans and 3-D walkthrough.

By collaborating with retailers of home furnishings, RoOomy gives potential owners a preview of what a room would look like with their choice of furniture. Using a design app on their site, buyers and homeowners can also try out various pieces of furniture or an entire scheme in a room, and the results are presented in 3-D. RoOomy also found a place on Architectural Digest’s list of the 20 best home design and decorating apps.

“Suddenly, virtual reality is making it possible for people to visualize a home before it’s built,” says Alexander Hovnanian, area president for K. Hovnanian at Port Imperial Urban Renewal VI, LLC. K. Hovnanian is innovating the way new construction is sold using virtual reality. Buyers tour Nine on the Hudson, a new project in West New York, New Jersey, while the 278-unit condo building is being constructed. Donning VR goggles they can walk the building and preview their future home as well as the views and patios and decks. Distant buyers use their iPad to link to an Opto tour using goggles supplied by K. Hovnanian. So far, the tours have resulted in more than 80 signed contacts from as far away as California.

What didn’t change dramatically during the tech revolution is the way property searches, which typically still require a specific location or geographic area as a delineator, are conducted. A few brands that cater to the affluent, such as Sotheby’s, allow a search by lifestyle, architecture or amenity without restrictions to a specific location.

Future searches for real estate potentially will bypass conventional portals and give access to an even larger number of properties — despite whether they are listed in the MLS — as blockchain technology becomes more widely adopted. Propify is a new social media search platform for real estate that employs blockchain technology. “The future of tech and real estate will make it easier to find the right property and Realtor and broker no matter where you are located. This will happen quickly and with confidence. There is no doubt that the traditional property search websites will not disappear overnight, but they will not be as aggressive as they once were,” says Leslie, who says the social media aspect of Propify has the most appeal for agents right now.

Blockchain and Distributed Ledger

Seemingly bursting on the scene in the last year, blockchain technology was originally developed as a platform for Bitcoin. But blockchain is applicable for many other uses, and is not to be confused with cryptocurrencies. “Blockchain technology is a digitized way to immutably record and share information. Blockchain-based smart contracts have the potential to transform real estate purchases, sales, leasing, financing and management,” says Marci Rossell, chief economist for LeadingRE and Luxury Portfolio. “Fortunately, the average person doesn’t have to grasp the technological details of how blockchain works; they just need to know what it can do for them.”

Some speculate that blockchain could be as transformative as the Internet was. Rossell compares the current climate to the Dot.com Boom of the late 1990s. “Blockchain is in the early stages of its commercial development and application. I expect that, over the next decade, it will be another Internet Wild West out there, with blockchain-related businesses emerging at a rapid rate. And just like the Dot.com Boom, a few will survive, thrive and transform their sectors — like Amazon. But there will also be many lost fortunes on the ideas that don’t work out,” she says.

Several blockchain platforms for real estate have been introduced, including Ubitquity and Propy.

Cryptocurrency Hubbub

Recently, Canter Companies, a San Diego brokerage, listed two properties offering the option of payment in cryptocurrency. Outlining the steps that had to be navigated, including banks and title companies, just to make this offering, CEO Andrew Canter says it was a detailed, but possible, process. Still, he cautions, “It’s early days. It’s something that is evolving every week.”

“Cryptocurrency is really a fascinating addition to the real estate industry,” says Hurwitz, who notes one of his agents just closed a $4.6 million transaction where the down payment was in Bitcoin. “It’s something that would have been unfathomable not too long ago,” he says. “What made it more challenging is that the buyer was actually obtaining a loan and it was necessary to find a sophisticated lender who understood the concept and was able to fund without a problem.”

The appeal of cryptocurrencies for global buyers should not be discounted since they potentially offer the ability to move currencies more securely and with fewer fees. Smart contracts and transactions via blockchain are expected to have appeal in countries where the sales process and property rights are not as secure as in the U.S.

Even though cryptocurrencies are not something most agents will encounter any time soon, major real estate brands and affiliate groups are keeping them on their radar. “Whether you’re skeptical of it or not, it is huge. We have thousands of new millionaires, and there are some new billionaires out there, purely off cryptocurrency. So, it’s something you’ve got to pay attention to,” says Danny Hertzberg with The Jills team at Coldwell Banker Residential Real Estate in Miami, who has briefed agents in his office on the topic. Even though people are marketing properties that say they are willing to accept cryptocurrencies, he says, most of those transactions actually close in dollars. “They’re doing an exchange, you know, prior to the deposit, and they’re exchanging Bitcoin for dollars and doing the same thing before the closing.”

Like Canter, Rossell believes it’s the early days and lots of changes are likely. “When a new technology of any kind emerges, multiple applications often compete for commercial dominance. Think Beta and VHS, or Facebook and MySpace. Real estate-related payment systems are likely to go through a similar process, where multiple systems compete until users coalesce around their preference. And don’t despair if you feel behind the curve on all things blockchain. While the topic burst on the scene late last year, it’s applications to real estate will unfold over many years.”

THIS STORY WAS FEATURED IN OUR SPRING 2018 ISSUE.

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Bountiful in Boca

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The home featured on our cover was crafted with the intention to impress, and clearly this objective has been achieved. But first impressions only hint at the value and experience of this property.

Located at a point where a canal and the Intracoastal Waterway intersect, it occupies an unparalleled location with panoramic vistas, deep water and easy access to the Atlantic. Currently, it’s the only new construction on the Intracoastal point lot in Boca Raton, but what makes it undeniably one of Boca’s prime properties is exceptional forward-looking design that is perfectly executed by luxury developer Mary Widmer. It is at once elegant, but comfortable, combining traditional elements in a streamlined design that also showcases features such as vintage ironwork, intricate ceiling treatments and a 35-foot-tall entry rotunda.

“Even though it’s over 10,000 square feet, it is cozy. There is such a warm feeling; this house just makes you happy when you are there,” says listing agent Kathryn Gillespie of Illustrated Properties. A well-conceived floorplan means this property is ideal for a range of lifestyles and life stages, as both a full-time residence or resort oasis.

Almost all the rooms look out to the water and to the lush green ribbon, including a mangrove preserve that lines the opposite shore. Extensive amenities include a media room, huge lower-level club room, office and a wine station. From either of the two 50-foot docks — both have electricity and water — it’s only minutes to the Atlantic via the Boca or the Hillsboro inlet. Boca’s private airport is also only 10 minutes away.

It’s hard not to fall in love with this property, which even has a little sandy beach with a fire pit. And being on the Intracoastal and still able to put your toes in the sand might be one of its most impressive features. The $11.5 million list price includes the furnishings. — Camilla McLaughlin

Photos courtesy of Kathryn Gillespie

THIS STORY WAS FEATURED IN OUR SPRING 2018 ISSUE.

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Outlook 2018: Back to a Slow Simmer

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Inventories, consumer confidence, growing worldwide wealth, the stock market, tax changes and local dynamics are affecting how hot each luxury real estate market is throughout the U.S.

By Camilla McLaughlin

“Fasten your seatbelt, 2018 will be a fun and scary, but prosperous ride,” is how Brad Inman, founder of Inman News, assesses the outlook for real estate this year. On the other hand, developers and planners tapped by the Urban Land Institute (ULI) call for “a long glide path to a soft landing” for the economy and the real estate sector. They expect the current cycle to extend into 2018 and even beyond.

These comments perfectly illustrate the divergent opinions on the outlook for real estate this year, especially luxury real estate.

For real estate overall, it’s not an overstatement to say 2017 was a very good year. The National Association of Realtors (NAR) expects sales of existing homes in 2017 to tally at 5.81 million transactions, the best number since 2006, and 3.8 percent higher than 2016. Home prices grew by almost 6 percent, a pace NAR expects to be duplicated in 2018. Looking ahead, the forecast calls for an increase of 3.7 percent in the number of sales as more new construction amps up the number of homes on the market. December sales soared 5.6 percent, with most activity at the upper end of the market fueled by move-up buyers with considerable down payments, cash buyers and easing of inventory shortages.

For luxury real estate, the narrative, while positive, revolves around locations and price brackets, depicting a market beginning to settle into a sustainable pace after a protracted recovery. “Bottom line, we’re going to have a strong year,” says Philip White, president and CEO of Sotheby’s International Realty Affiliates. “The one difference this year is the up-wind market is having a better 17 versus 16. We are going to have more transactions and a higher average sales price this year than last year.” 

In cities such as Seattle, San Francisco or Denver, demand for upscale properties outpaces supply. “Chicago now has 60 cranes in the air which has only happened twice in my 25 years here,” says Craig Hogan, vice president of luxury at Coldwell Banker Real Estate.

New York City is often portrayed as being in the doldrums. Although there has been a slow down in the ultra high end, other price points and neighborhoods all over the city are far from flat. Most active, according to Ellie Johnson, president at Berkshire Hathaway HomeServices New York Properties, is the $1 million to $5 million range, where multiple offers are not uncommon. From Dec. 11 through the 17, 18 properties went under contract above $4 million, which she says is a much larger number than the same period a year ago. When New Yorkers confront change, they often put buying plans on hold. Johnson says the upper price brackets are in a “strong hold pattern” right now, but she expects it to be short lived. Also, Wall Street bonuses should translate into “a very nice first quarter.”

“I already see a softening in the luxury home market with a growing inventory and properties on the very high end sitting on the market. An excess of new construction, with major homes that have been enthusiastically designed and under construction when the market was hotter, are now coming on to the scene in a different paradigm.”

— Bob Hurwitz, founder and CEO of
The Hurwitz James Company

 image courtesy istockphoto.com / Meinzahn

Traditional luxury markets in New York, California and Florida are still strong, but brokers also see big plays in smaller markets. Lesli Akers, president of Keller Williams Luxury Homes International, illustrates with a recent $22 million transaction in Austin, “the biggest sale in the history of that market.”  ULI forecasts a shift in interest and investment dollars to smaller metros such as Seattle, Austin and even Salt Lake City as well as close-in suburbs of New York and Washington, D.C. In New York, Diane Ramirez, chairman and CEO of Halstead, says new buildings, both residential and rental, with views of the Hudson River, extensive amenities and a short commute to the city are generating interest from younger consumers in White Plains, New Rochelle and Tarrytown.

“Luxury is starting to move into every market. As neighborhoods change, the buyers change,” says Diane Hartley, president of the Institute for Luxury Home Marketing, noting it’s important for agents to understand this new buyer, new price points and new expectations.

For agents, “it’s no longer enough just to be a local expert, they have to have global knowledge as well. Most of the affluent are looking to see what is happening in the global market. But it’s also who agents are bringing to look at the home,” says Anne Miller, director of business alliances for RE/MAX.

At LuxuryRealEstate.com’s fall conference, comments about local markets were all positive, something Publisher John Brian Losh says usually doesn’t happen. “Prices are directly related to the economy and consumer confidence, and right now consumer confidence is high,” he says.

More than consumer confidence is bolstering luxury sales. Adding to demand are the growth of wealth in the U.S. and worldwide, a surge in the stock market, and a rise in foreign buying of U.S. properties. There are few, if any, indications this will change in the immediate future. Paul Boomsma, president of Luxury Portfolio International, explains: “Our white paper and our global survey show a lot of interest from buyers, not only for this year but over the next two years. There is more interest on the buy side than the sell side, and that is consistent among the high end, and it extends to 17 different countries. There is a lot of interest and not just in U.S. properties.” 

Purchases of U.S. properties from foreign buyers surged from $102 billion to $153 billion in the year ending March 2017, accounting for 10 percent of dollar volume of sales. “Foreign buyers generally see the U.S. as a safe haven for investment,” says Bob Hurwitz, founder and CEO of The Hurwitz James Company, whose current clients include mega affluent buyers from Turkey, Singapore, China and Ukraine looking buy in price ranges of $20 million and up. “In a couple of cases this includes multiple properties, including commercial and development not exclusive to California,” he adds.

While most markets sizzle, the high end in some locations and price brackets is back to a slow simmer. “I already see a softening in the luxury home market with a growing inventory and properties on the very high end sitting on the market. An excess of new construction, with major homes that have been enthusiastically designed and under construction when the market was hotter, are now coming on to the scene in a different paradigm,” says Hurwitz. “Prices have already adjusted, and as developers and luxury home builders start having homes sit on the market, there will be opportunities to make good buys.”

“In the ultra high end, I think prices are being adjusted to the economy,” says Losh, noting a common issue with ultra properties. Often sellers price the home at the highest price they ever imaged. After a couple of years, they get realistic. “What really determines value is what it cost to replace a property,” he says.

The ultra high end may be cooling, but, Hogan says, the luxury market is healthy. “The $1-to-3 million, $3-to-5 million and $5-to-9.9 million sectors are strong. Not in every city but as a whole, based on our year-to-date numbers. I honestly feel that we are simply normalizing.”

“We are seeing some moderating trends in the luxury space,” says Akers. Downward price adjustments and longer days on market are signs that luxury is moving toward a more balanced market. Still, she adds, “Truly unique properties still command top dollar and cash offers.”

It would seem that the performance of the stock market might discourage real estate investment. Instead, Marci Rossell, chief economist for Leading Real Estate Companies of the World, says it has an opposite effect. “For the luxury buyer, real estate is part of a larger portfolio and portfolios have swelled in terms of stock market value over the last two years. So, from the perspective of balancing a portfolio, real estate can look attractive.” The most influential trend for 2018, particularly the high end, is new consumer attitudes. “Across all price points, the word value is critical today,” says Ramirez. “Value to a $1 million buyer and a $600,000 buyer is not the same, but both want the perception of value.”

Consumers have become even more demanding. “There is a desire for perfection. They want a property or an experience to be exactly what they want it to be. There is no desire for compromise,” says Hartley.

Price matters, but it’s not the only factor in the value equation. “If it’s been on the market awhile, bringing down the price is not going to do it. You have to see what’s selling,” says Ramirez, using the example of a $7 million property in Darien that sold in a single day. It was well priced and located across from the water. Water views continue to be in highest demand.

People want new. “If it’s an older home, it must be newly renovated,” says Ramirez. “People feel they don’t have the time for a renovation and they are unsure of the cost.”

The bottom line for sellers, according to Miller, is to listen to their agent. “We’re hoping that everybody takes a reality check on location, quality — is it unique and rare, does it have all the luxury amenities? — before they list their home.”   

People want new.

“If it’s an older home, it must be newly renovated,” says Diane Ramirez, chairman and CEO of Halstead. “People feel they don’t have the time for a renovation and they are unsure of the cost.”

Image courtesy istockphoto.com / TobiasBischof

Also, says Kevin Thompson, chief marketing officer at Sotheby’s International, “There is a search for the unique.” This new consumer isn’t interested in cookie-cutter anything. “They want something personal and outside the norm, and they are willing to pay for that.”

Looking ahead, Hogan sees new construction, contemporary/modern, a smaller footprint and full connectivity shaping future demand.

“We’re seeing more and more of what I call the ‘Tesla consumer with the Apple watch’ — a client who’s passionate about their lifestyle and their environmental foot print. They want to do what’s right for the earth, and they don’t mind people knowing it’s expensive,” shares Akers.

Recent ultra-high-end sales in Greenwich and Manhattan are evidence that buyers are out, according to appraiser Jonathan Miller, who noted in a recent blog: “Buyers remain in the market, but the price needs to reflect 2017.”

Akers says sellers should prepare to sell at fair market value. “We’re not in a ‘dip your toe in the market and test it out’ kind of market.”

The number of homes available for sale continues to be the fulcrum on which markets balance. Regarding real estate overall, Lawrence Yun, NAR’s chief economist says: “Home prices, after multiple years of fast growth, still show no signs of cooling because of the ongoing housing shortage in much of the country. The latest Case-Shiller price growth of 6.2 percent on a nationwide basis marks the strongest rise in over three years.”

High-priced markets are not immune to inventory challenges, but it’s not in every location. Instead, it is likely to be places that have had strong buying for years and strong population growth. White uses the example of San Francisco, where anything that is priced right is snapped up. Inventory constraints, according to White, are not unique to the U.S. “In Hong Kong and Japan, there are stories where people are lined up to buy high-priced units in new buildings, even to the point where they will sell their place in line.”

This year, for the first time since the downturn, inventories eased ever so slightly, and forecasts point to more new construction in the next few years. Javier Vivas, director of economic research for Realtor.com, sees 2018 as “a significant inflection point in the housing shortage, with increases in inventory felt initially in the mid- to higher-price points above $350,000.” Vivas says Boston, Detroit, Kansas City, Nashville and Philadelphia are predicted to see inventory recovery first.

As inventories grow, sellers need to understand that homes that are dated or not priced accurately will fall to the bottom of prospective buyers’ list of target properties.

At year-end, tax changes and continued political uncertainty loomed over every forecast. “For buyers worldwide, I think policy changes will matter more than economic climate. This is a year when tax policy could drive some location decisions. If you are a first-time buyer in a high-tax area and you are looking to put down roots, you will think long and hard about the tax consequences of a location. Even on the European front, we know Brexit will affect location decisions. Already we are seeing relocations out of London to Frankfurt,” shares Rossell. “The homebuying decision is part of a large mosaic, and the tax implication of that decision used to be a smaller tile, and it will become a larger tile.

Looking ahead: “The economy and housing market will grow like crazy. Job creation is at record levels; unemployment is at a 17-year low, wages are feeling upward pressure and companies are investing at a fast and furious pace,” commented Inman. “A backdrop of political uncertainty will not slow down the global economic thoroughbred that is galloping at a full run. Left in the dust will be housing affordability in many major metros.”

THIS STORY WAS FEATURED IN OUR WINTER 2018 ISSUE.

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