The Rich Are Different

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The Changing Luxury Market

I am a specialist in luxury homes and marketing luxury goods to clients throughout the world. This current economic climate though has changed my opinion of the definition of luxury. Times change, people change and luxury has changed.

Luxury clients were once an elite group of individuals who were fairly obvious to even the most amateur of sales executives. But luxury elite status has dimmed somewhat as firstly, many people are now able to afford luxury goods and secondly, many luxury clients remain cautious after the real estate and financial meltdown.

Today’s luxury homeowner may look wealthy (expensive diamonds, cars, art) but underneath their demeanor is a homeowner who is living month to month and wondering how to maintain appearances. It’s a fragile world and frankly, they are ill prepared.

Today’s TRUE luxury client often looks different and buys based on knowledge and experience. The smart ones are people who have not fallen prey to every excess on the market, purchased a bucket load of baubles and continue to drive the latest most expensive cars. I am finding many luxury clients asking me to assist them as they work through a financial downturn they never anticipated or saved for.

It’s a scary world. Our next election means a great deal for our economy. As I have said in the past, home sales equal a strong economy.

Today’s luxury client could mean dreadlocks and diamonds. In other words – today’s luxury is not the obvious…in fact, it’s the reverse.

Today’s luxury buyer has invested well and with discretion. They may may drive a Ford and not have a multi-million dollar medieval castle. They wear jeans and Nikes. The high-end buyer is unique and totally in tune with the market.

80% of today’s luxury buyers are tech savvy and researches every purchase. And most importantly, today’s luxury customer rarely buys on impulse. Long term investments are the rule with multiple properties instead of one show home. It’s actually an interesting turn of events.

I am reminded of my grandmother who came from great wealth but lived her later years in a charming bungalow of about 970 square feet. She mowed her own yard in knee highs and pearls. She drank her tea on fine china in a tiny kitchen. That’s somewhat representative of today’s luxury.

They luxury buyers are different, they act different and they have a certain rule for living that is going to redefine the future. They may not have a million dollar home but their home will be chic and charming. Gaudy is out and tasteful and charming is in. Small is the new big. This is going to be amazing to watch the old world appeal of outlandish display transformed by a new era of discrete buyers.

To quote F. Scott Fitzgerald, “The rich are different…”

Homeownership Still Part of the American Dream

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he National Association of Realtors (NAR) just released the first edition of their Housing Opportunities and Market Experience Survey (H.O.M.E.). NAR explained that the report covers:

“…core topics that will be tracked on a monthly basis such as views on housing as a good financial investment, whether homeownership is part of the American Dream…”

The current survey confirmed two long standing beliefs regarding homeownership:

1. Americans at every income level believe homeownership is part of the American Dream

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2.)  Americans at every age believe that homeownership is a good financial decision

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Bottom Line

Americans in all age groups and income levels believe in homeownership as a piece of their American Dream. If you are ready and willing to buy your dream home, CALL ME so I can help you determine if you are able to.

Top Reason to List Your House For Sale Now!

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If you are debating listing your house for sale this year, here is the #1 reason not to wait!

Buyer Demand Continues to Outpace the Supply of Homes For Sale

The National Association of REALTORS’ (NAR) Chief Economist, Lawrence Yun recently commented on the inventory shortage: “While feedback from REALTORS® continues to suggest healthy levels of buyer interest, available listings that are move-in ready and in affordable price ranges remain hard to come by for many would-be buyers.” The latest Existing Home Sales Report shows that there is currently a 5.1-month supply of homes for sale. This remains lower than the 6-month supply necessary for a normal market and well below November 2014 numbers. The chart below details the year-over-year inventory shortages experienced in 2015.

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Bottom Line

CALL me so that I can show you the supply conditions in Central Florida and assist you in gaining access to the buyers who are ready, willing and able to buy now!

Small Spaces

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I love projecting future trends. This one isn’t too difficult to predict. People are going smaller. The Millennial generation is not enamored with great, big houses and desire a lifestyle that won’t leave them bankrupt.

I have downsized from a very large home to two smaller home, one as my permanent residence and one for vacation. If you put my two homes together you would have one big house. I love them both.

I find smaller homes are easier to tend and maintain. I also like the fact that you have to think of a purpose for every item of furniture, clothing and mementos. A place for everything and everything in its place.

Designer Gary McBournie says: “I prefer living in a small house. It just puts its arms around you and makes you feel at home.”

Go small and go home…

 

 

 

 

Homeownership Builds Wealth and Offers Stability

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The most recent Housing Pulse Survey released by the National Association of Realtors revealed that the two major reasons Americans prefer owning their own home instead of renting are:

  1. They want the opportunity to build equity.
  2. They want a stable and safe environment.

Building Equity

In a recent article, John Taylor, CEO of the National Community Reinvestment Coalition, explained that those who lack the opportunity to become homeowners have a weakened ability to reinvest their wealth:

“We traditionally have been huge supporters of homeownership. We see it as a way to provide stability for households but also as an asset-building strategy. If you continue to be a renter, locked out of the homeownership arena, increasingly those things are further and further out of reach. They’re joined at the hip. They perpetuate each other.”

Family Stability

Does owning your home really create a more stable environment for your family? A survey of property managers conducted by rent.com last month disclosed two reasons tenants should feel less stable with their housing situation:

  • 68% of property managers predict that rental rates will continue to rise in the next year by an average of 8%.
  • 53% of property managers said that they were more likely to bring in a new tenant at a higher rate than negotiate and renew a lease with a current tenant they already know.

We can see from these survey results that renting will provide anything but a stable environment in the near future.

Bottom Line

Homeowners enjoy a more stable environment and at the same time are  given the opportunity to build their family’s net worth.

4 Reasons To Buy A Home Before Winter Hits!

  
It’s that time of year; the seasons are changing and with them bring thoughts of the upcoming holidays, family get-togethers, and planning for a new year. Those who are on the fence about whether now is the right time to buy don’t have to look much farther to find four great reasons to consider buying a home now, instead of waiting.
1. Prices Will Continue to Rise
The Home Price Expectation Survey polls a distinguished panel of over 100 economists, investment strategists, and housing market analysts. Their most recent report released recently projects appreciation in home values over the next five years to be between 10.5% (most pessimistic) and 25.5% (most optimistic). The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer makes sense.
2. Mortgage Interest Rates Are Projected to Increase
Although Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year mortgage have softened recently, most experts predict that they will begin to rise later this year. The Mortgage Bankers Association, Fannie Mae, Freddie Mac and the National Association of Realtors are in unison projecting that rates will be up almost a full percentage point by the end of next year. An increase in rates will impact YOUR monthly mortgage payment. Your housing expense will be more a year from now if a mortgage is necessary to purchase your next home.
3. Either Way You are Paying a Mortgage
As a recent paper from the Joint Center for Housing Studies at Harvard University explains:
“Households must consume housing whether they own or rent. Not even accounting for more favorable tax treatment of owning, homeowners pay debt service to pay down their own principal while households that rent pay down the principal of a landlord plus a rate of return. That’s yet another reason owning often does—as Americans intuit—end up making more financial sense than renting.”

4. It’s Time to Move On with Your Life
The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise. But, what if they weren’t? Would you wait? Look at the actual reason you are buying and decide whether it is worth waiting. Whether you want to have a great place for your children to grow up, you want your family to be safer or you just want to have control over renovations, maybe it is time to buy.
Bottom Line
If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

New York Times: Homeownership is Best Way To Build Wealth

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The housing market has made a strong recovery, not only in sales and prices, but also in the confidence of consumers and experts as an investment. In a New York Times editorial entitled, “Homeownership and Wealth Creation” they explain:

“Homeownership long has been central to Americans’ ability to amass wealth; even with the substantial decline in wealth after the housing bust, the net worth of homeowners over time has significantly outpaced that of renters, who tend as a group to accumulate little if any wealth.”

Many of the points that were made in the article are on track with the research that the Federal Reserve has also conducted in their Survey of Consumer Finances.

The study found that the average net worth of a homeowner ($194,500) is 36x greater than that of a renter ($5,400).

The National Association of Realtors (NAR) expanded on the Federal Reserve’s research and projected that by the end of 2015, the average homeowner will have nearly 41x the net worth of a renter. Their findings are detailed in the graph below:

Increasing-Gap

One reason for this large discrepancy in net worth is the concept of ‘forced savings’ created by having a mortgage payment and was explained by the Times:

“Homeownership requires potential buyers to save for a down payment, and forces them to continue to save by paying down a portion of the mortgage principal each month.”

“Even in instances where renters have excess cash, saving a substantial amount is difficult without a near-term goal, like a down payment. It is also difficult to systematically invest each month in stocks, bonds or other assets without being compelled to do so.”

Bottom Line

“As a means to building wealth, there is no practical substitute for homeownership.” If you are a renter who is considering making a purchase, sit with a local real estate professional who can explain the benefits of signing a contract to purchase over renewing your lease!