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Luxury Optimists: Owners of Million-Dollar Homes Expect Values to Keep Growing, Study Finds
Posted By beth On June 19, 2007 @ 9:36 AM In Finance and Economy,Finance, Economy & Government Issues | Comments Disabled
y Amy HoakRISMEDIA, June 20, 2007-(MarketWatch)-Many homeowners living in luxury are also upbeat about the future value of their homes — even as many markets are cooling, according to a survey released Monday by Coldwell Banker Previews International.
Of the 301 U.S. homeowners surveyed, 56% of them said they expected the value of their home to increase at least somewhat during the next year, while 10% expect it to increase significantly. Fifty-eight percent think the value of their primary residence will increase at least somewhat over the next five years; 36% believe it will increase significantly during that time.
Participating homeowners had to have a primary residence valued at more than $1 million, or $2 million in California, a state where median home prices are higher than the rest of the country. They also needed to have investable assets of more than $1 million.
A possible reason for the optimism among the group, “A lot of million-dollar homes are in areas that are still appreciating strongly,” including land with views of mountains or bodies of water, said Jim Gillespie, president and CEO of Coldwell Banker Real Estate Corp., in a telephone interview. “They’re still seeing that as a pretty good investment.”
Women were more optimistic about their future home values than men, according to the survey. While 61% of female participants said that they expected the value of their homes to increase somewhat over the next year, 50% of males said the same. Forty percent of women expected their home’s value to increase significantly over the next five years; 32% of men agreed.
Gillespie said the fact that women make up a significant segment of the home-buying public, combined with their overall confidence in real estate, suggests that women may “be the driver that ultimately helps the market turn the corner.” About 22% of all homes sold last year were to single women, according to the National Association of Realtors.
Asking for seconds
Forty percent of participants were positive enough about the real-estate market that they’re considering the purchase of a second home in the next year for their family to use, the survey found. Thirty-eight percent said they’d purchase a second home as an investment, and 22% said they’d buy a second home as a place to retire, according to the survey.
As a National Association of Realtors report also suggested earlier this year, the demand for second homes has a lot to do with demographics.
“Most of these people are in their prime earning periods of their lives,” Gillespie said. “They’re baby boomers and they’re at the point in their life when they’re thinking about retiring and purchasing a second home.”
Of those planning on moving their primary residence, 61% said they wanted a bigger home and 51% said they were relocating. Forty-seven percent want a different floor plan or layout, 43% wanted to move to a beach, bay or lakefront location and 41% wanted to be closer to recreational activities including golf, swimming and tennis — indications that many of these homeowners are inspired to move by lifestyle factors, Gillespie said.
Seventy-two percent of these million-dollar homes have designer kitchens and 63% have formal landscaping. Half have home entertainment centers and 34% have wine cellars. A room dedicated almost solely to entertainment was in 72% of homes represented in the survey, with 30% indicating they have movie-theater-style seating as well.
On the wish list for these homeowners: Heated floors, which 23% already have and 21% may install in the future. Other popular add-ons include a boat dock, which 15% of participants already have and 9% may install in the future; and a bedroom kitchen, which 11% have and 16% may install in the future.
The increasing popularity of adding a kitchen to a bedroom area aligns with the desire for some to have better floor plans in their new homes, Gillespie said. It’s likely that many of these baby boomers are anticipating their parents living with them in the future, and are either moving or remodeling to address those new needs.
Also on the wanted list: an indoor pool, which 11% already have and 13% may install in the future; a tennis court, which 10% already have and 19% may install in the future; and a golf course or putting green, which 10% already have and 16% may install in the future.
“High-end kitchens and entertainment rooms now are givens in luxury living,” Gillespie said in the release. “Interestingly, many of the items that are gaining in popularity all have to do with sports and maintaining a healthy lifestyle. And these add-ons don’t come cheaply; a regulation-size tennis court can run as much as $60,000 or more.”
Amy Hoak is a MarketWatch reporter based in Chicago.
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