Should buying and selling Luxury Property even be called a ‘market’?

In short…No. The people who buy luxury properties simply aren’t effected by ‘market conditions.’ They are certainly ‘aware’ of the conditions and may even cut back a bit on their spending; however, for the most part people with these types of income are not effected by abject economic downturns and upturns.

I presume this may raise some questions or even an argument. To the questions I ask you this? Do you think that Bill Gates or Warren Buffet are filling out loan apps at their local bank for a good rate on a 200,000 dollar home? No offense to a 200,000 dollar home, but this blog is about ‘luxury’ real estate which is a whole different ballgame.

The über-rich are not worried about this. I don’t mean to say that they ‘lack empathy’ or are ‘cold’ to the crisis that a small part of the country and bankers are facing, but I do mean to say it is not something that affects their decision to buy.

For the most part, these palatial residences (whether they have been there for 100 years or were tailored to their own specific luxurious pleasures) are bought and sold on (but not limited to) these least 6 types of buyers:

• Luxe Buyer A is an athlete and just signed a new contract, or was traded
• Luxe Buyer B is an Entrepreneur and would like a 2nd, 3rd, 4th, etc… home in location X
• Luxe Buyer C just developed a new way of ‘selling coffee to the masses,’ the ‘operating system,’ wrote a book about ‘wizardry’ (which I have still yet to read…),
• Luxe Buyer D just came into a large sum of money that was waiting for them
• Luxe Buyer E writes songs, has a family and a working band - in which case, this buyer would like a place in the Mountains, at the place where his family resides, etc
• Luxe Buyer F is investing in a sprawl of luxury properties because of their inherent value and surefire investment - this group may be from abroad

This is precisely why the gloom and doom ‘housing-market’ conditions that are cited over and over by the ‘if it bleeds, it reads’ news today is irrelevant to luxury buyers. Miami is a prime example of this. Yes, the luxury home’s ‘appraised value’ may be lower because of ‘comps,’ but it brings me back to something an associate used to say to me, and it applies - across the board… “you cannot pay too much for something you want’ . . . this is true no matter what tax bracket you are in.

Luxury buyers indeed watch the market conditions, and are often more keenly aware of the conditions than anyone. By identifying the aforementioned über-rich as part of a market, is kind of like identifying Harvard and Yale students as part of the ’school system.’ While both may be true in the logical sense, when we use our ‘less than common’ sense, we can conclude that it isn’t a market at all… it is an ever widening group of people who need more and more space to live, cars to drive, planes to fly and boats to row…

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Tags: ARod, Bill Gates, Dave Matthews Band, duPont REGISTRY, Howard Schultz, Jane Iten, Luxury Homes, Madonna, Mark Cuban, Miami Luxury, Real Estate, Shaq

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