Luxury home sales outpace mid-low tier sales

What seemed like the breakout year in real estate may turn into a hard act to follow. Although the National Association of Realtors® May 22^nd news release made headline news by skillfully pointing out that April existing home sales increased 1.3% from March; April’s sales data were 6.8% lower than last April. Much like the assertion to “Keep Calm and Carry On,” the spin on data may bean attempt to motivate home buyers and sellers.

The Greater Capital Association of Realtors® home sale statistics were consistent with NAR’s, such that Montgomery County MD single family home sales decreased about 8.2% in April compared to the same time in 2013. Looking deeper, the numbers reveal a similar scenario that played out in 2011 when a bifurcated market emerged between upper bracket and middle to low bracket homes. Sales of upper bracket homes are doing very well this year, while moderate to lower bracket homes sales are decreasing compared to last year. And much like 2011 when luxury home sales hit record prices (when DC’s Evermay and Halcyon House sold); 2014 is also a year of record luxury home sales (LA’s Fleur-de-Lys sold for $102M, CT’s Copper Beech Farm sold for $120M, and a NY mansion sold for $147M; each sale successively breaking the record for most expensive residential US home during a 5 week duration!). Consistent with this theme: cash sales are increasing this year, while first time home buyers are decreasing.

While the housing market may be shaping up to be similar to that of 2011, the reasons for a similar profile are different. We were looking for the market bottom during 2011, as well as assimilating an unprecedented number of distressed properties. However, even though distressed sales are rapidly decreasing; 2014 was supposed to be an extension of last year’s increased sales activity.

What we may be experiencing is the flip side to the housing crisis, as described by Daren Blomquist, RealtyTrac Vice President in his May 19^thblog post (Nearly One-Third of Americans Live in Counties Where One in Five Homeowners is Underwater: Heat Map; RealtyTrac.com). Blomquist characterized the lack of participation in today’s market as being from the unusually high number of home owners with high loan balances on their home, including the many whose mortgages are underwater. This lack of participation is much like the many homes taken out of the market because of the foreclosure crisis during the downturn. He stated that the “normal flow [of move-up buyers] is being disrupted by homeowners with negative equity who are holding back from becoming move-up buyers, which in turn is impacting the availability of inventory downstream for first-time homebuyers.” According to RealtyTrac, those who are “seriously underwater” (125% or higher of loan balance to home value) account for 11% of Montgomery County MD home owners, while the county average loan balance to home value is about 79%.

The idea of the inactive move-up buyer is not new. In fact it seems to be that move-up buyers were lacking after other deep recessions; the August 17, 1985 article published in the Chicago Tribune titled, “Move-up Buyer Provides The Base For A Recovering Housing Market” is a testimony for such behavior. The timing for the move-up buyer is likely correlated to the time necessary to either recover lost equity; or reach a comfort level for the net amount gained in their home sale.

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By Dan Krell
Copyright © 2014

Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

May 1, 2014July 3, 2019

Squatters and real estate – a reality in today’s economy

Although some squatters move into vacant homes to live rent free, others do so to take advantage of adverse possession laws. The squatter movement has grown, not just in the U.S. but significantly in Europe as a means of social change. Activists advocate squatting as a response to Europe’s high unemployment, austerity, decreased public housing and declining living standards. Currently touted as “alternative housing,” squatting in the U.S. increased during the time when foreclosures and vacant homes skyrocketed after the financial crisis.

A recent story, about squatters taking over the Florida home of an active duty soldier who is stationed in Hawaii, highlights a recent trend. According to Florida’s WFLA Channel 8, the home owner claimed people broke into his home and changed the locks; however, the squatters who moved into the soldier’s home claimed to have a verbal agreement with the home’s caretaker to live in the home while making repairs. When the Afghanistan veteran planned to moved back to Florida, he was caught off guard when he was told removing the squatter was a civil matter and had to go through the eviction process to rid the home of the invaders. As the story gained national attention, veteran groups hired an attorney to begin eviction. However, it appears that the combined pressure has facilitated the squatters’ departure; but not without making a statement of their own by leaving the home in disarray and their dogs to roam freely.

Two local cases of squatting were reported last year, where defendants claimed “sovereign rights.” A vacant, bank owned Waldorf home was reported to be occupied by seven individuals who claimed to have the right to occupy the home because they are “sovereign citizens.”

A March 18, 2013 Washington Post article (‘Moorish American national’ charged with trying to take mansion) highlighted the other case, where an individual also claiming sovereign rights moved into a vacant $6 million Bethesda home listed for sale. The squatter allegedly attempted to change the tax records to indicate he was the owner by appearing at the Montgomery County court house and presenting “historical” documents and maps. But the county clerk turned him away saying that a “proper deed” was needed for such a change. The squatter reportedly went as far as emailing the listing agent cryptically claiming ownership. According to news reports, the squatters in both local cases were charged by police.

The Bethesda case emphasizes that bank owned foreclosures are not the only homes occupied by squatters, vacant homes listed for sale are also targets. Nationwide reports about squatters in upper bracket luxury homes increased last year, as well as the attention to “squatter’s rights” and adverse possession laws.

Last July, Sheree R. Curry of AOL Real Estate (Squatters Beware: States Are Revising Adverse Possession Laws) highlighted the case of a squatter who moved into a Boca Raton, FL mansion listed for sale. The squatter was eventually “locked out” of the home, but the events moved the community in an effort to change Florida’s Adverse Possession laws. And although adverse possession laws vary throughout the country, Curry reported that some states are revising these laws to protect home owners. New York and Washington had already changed adverse possession laws when Florida changed theirs to prohibit “acquiring title to real property by possession”; which went effect July 1^st 2013.

April 17, 2014December 13, 2022

Luxury real estate reaches new highs

Some of the most significant real estate sales of the year occurred in the last two weeks. The first is the home known as Fleur de Lys; Realtor.com reported on April 4^th that the Los Angeles mansion-estate that was described as “unsellable” – sold for LA record $102 Million. The home’s former owner was Suzanne Saperstein, socialite and philanthropist who’s seemingly public divorce from billionaire ex-husband David Saperstein appeared to capture the attention of the country when papers were filed in 2005.

Styled after Versailles, the 100 room mansion was originally listed in 2007 for a then record of $125 Million. However, the on and off again listing made some experts believe that the home would not fetch the asking price. But in the end, a bidding war ensued between several buyers, with the winner purchasing the home for the area record amount.

Although the sale of Fleur de Lys was news when it sold, it now takes a back seat to the highest priced publicly listed sale of a single family home in the country. Realtor.com reported on April 14^th that the Connecticut estate, Copper Beech Farm, sold for a record $120 Million. The home was the former residence of one of the founders of what would become U.S. Steel, and originally listed for $190 Million. The 15,000sf waterfront property is situated on 50 acres; and boasts luxury features such as: hand carved fireplaces; soaring ceilings (with intricate artwork); the dining room features columns, oak paneling, and a tracery ceiling; the solarium is lined in detailed glass.

Although the high priced home is touted for its record sale price, a July 2013 NY Times article (Burdened Estate Bears Monumental Price Tag, and Many Mortgages) reported that the most expensive home ever publicly listed for sale was also “one of the most heavily mortgaged homes in American history;” however, the article stated that the amounts owed were not of public record, and additional properties were reportedly sold to repay the loans.

This significant listing isn’t a pyramid, nor is it a house of cards. You might not even know that the former owner of this “butter-colored stucco house with the slate roof and second-story balustrades” was the infamous man for whom the financial scheme was named. Yes, Charles Ponzi’s home is listed for sale. Maybe the sale would have been significant on a number of levels if the home were listed 4-5 years ago; however, the stately colonial’s listing is still significant nonetheless.

The Boston Globe reported on April 4^th (Charles Ponzi’s former home up for Sale) that the Lexington MA home only changed owners three times since it was built in 1913; prior to the current listing, each sale was private. What makes this sale significant is that it is the first time the home’s sale is being listed publicly. Although the home was to be a symbol of Ponzi’s achievements and status; ironically, Ponzi’s ownership was only a six week stretch prior to his arrest in 1920. Maybe the new owner might be someone who is interested in the home’s history; however, the home is described as a “Colonial Revival mansion with 16 rooms and a charming 4 room carriage house…restored,” and of course hyped as the former residence of Charles Ponzi.

by Dan Krell
© 2014

Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. This article was originally published the week of April 14, 2014 (Montgomery County Sentinel). Using this article without permission is a violation of copyright laws. Copyright © Dan Krell.

December 2, 2013July 1, 2019

High end real estate and hot markets

High end real estate is hot and is pushing home price limits to new levels. And although many luxury home buyers are seeking homes that are in vogue, other high net worth home buyers are looking for other things in their homes.

Many high end home buyers want their homes to be a piece of art; and it seems as if there is a market for pairing art and real estate. What seems to pair luxury real estate and art is Art Basel (the annual premier art show) in Miami, where luxury real estate agents are flocking to make sales.

According to The Miami Herald, South Florida developers have paired “exceptional art” with high end real estate to create something special. And there is a market for it.

However, while many luxury home buyers are looking for exquisite art, other buyers of high end real estate are looking for “safe havens.” These home buyers are looking for established markets that are performing well and have a history of stability.

Not sure where the hot high end real estate markets are located? According to Zillow some of the top luxury real estate markets are New York, Los Angeles, San Francisco Bay Area, Miami, and Washington DC. The metro DC area includes Maryland and Virginia, and is not only the seat of power – but is also culturally significant offering a wide variety of art and music. The superlative selection of high end homes in the DC metro area offer a multitude of home styles and locations for most any life style; many high end home inquiries in the Maryland area include Bethesda, Potomac and Chevy Chase.

by Dan Krell © 2013

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November 7, 2013November 23, 2021

Luxury real estate and the people who live there

What is about luxury homes that many people find intriguing? It may be the home itself; or maybe people are interested in the lifestyle of the owner, who may be a celebrity. Regardless, the concept of the luxury home has changed through the ages from an expression of power and security to possibly encompass your home – depending on your perception.

by Dan Krell © 2013

According to Rachel K. Ward (luxurystudies.blogspot.com), luxury is a point that exists between comfort and extravagance; there is no absolute measurement of luxury because it is a matter of personal perspective. And since the definition of luxury depends on who you ask, one’s “level of comfort” may seem excessive to others. Believe it or not, this has led some societies to instill “ethics of luxury.” Dr Ward has attributed the ethics of luxury to the Romans, who instituted laws limiting spending on many items because of their belief of a natural limit when a person has “enough.”

The concept of luxury may have developed in early hominids if there was an awareness of the notion of comfort; which may have been about eating and sleeping well. As civilization developed, the luxuries of life were typically had by the wealthy and powerful. Feudal manor life is an example of this; the manor was a substantial and large building that was the center of feudal life and also served to show the wealth of the lord.

As the middle class emerged during the industrial revolution, simple living comforts became more affordable and widely available. As the middle class became an increasingly important sector of the economy, the housing industry provided affordable comfortable homes that were equipped with the latest technology and living trends.

Although the general concept of a luxury home has changed through time, there are certain characteristics that come to mind when describing a luxury home today. The first is cost: many consider homes that cost in excess of one million dollars in the grouping “luxury real estate.” And according to Luxury Portfolio (luxuryportfolio.com), “A luxury home or luxury real estate is generally defined as a property priced within the top 5-10% of a given real estate market…” However, there are many area homes that sell in excess of one million dollars that seem rather ordinary; “upper bracket” homes may be expensive, but not all are classified as “luxury.”

Luxury Portfolio also describes luxury homes as having “…a unique quality or distinct feature that makes it stand out in the luxury home and luxury real estate marketing arena.” Many luxury homes are thought to be larger than most in the market area; although like price, size alone does not necessarily denote a luxury home. Luxury homes can be of modest size, as well as exist in high rise buildings.

Sometimes, the features and uniqueness of a home may give it luxury status. Luxury homes are often custom homes with the latest in technology and comfort amenities. Unfortunately, a home’s luxury status may diminish with time if the home’s amenities and technology are not maintained and regularly updated; today’s luxury home can be tomorrow’s tear-down.

Ultimately, according to a Peter G. Miller article (What’s A Luxury Home; Realty Times, June 20, 2001), “…For a surprising number of people, ‘luxury’ probably defines a house of reasonable size — and the ability to afford far more.”

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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. This article was originally published the week of November 4, 2013 (Montgomery County Sentinel). Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.