Hello My Favorite People!
An article from last Saturday’s Chronicle about the consumer habits of the rich was chock full of interesting statistics. Here are some things I learned:
• Households with $5 million in assets, not including the house, rose by 26 percent in 2006 alone.
• Less than 10 percent of the affluent owe their fortunes to inherited money.
• Half of America’s wealth was created in the last decade.
• 175 of the Forbes 400 are “blue-collar billionaires,” coming from working-class backgrounds. One-third of them had parents who never went to college.
This means more wealthy people have middle-class values today—and right now they are spending less. Insecure about the economy, 39 percent of the well-to-do said they would spend less on luxury goods in 2008 than they had before. And high-end discretionary purchases are down an aggregate 20 percent in the second half of 2007. This translates into a softening in sales for yachts, private jets and designer shoes.
Lest you think this translates into a softening in price for upper-end luxury properties however, please remember that real estate is NOT a discretionary luxury purchase. True luxury properties (think big space, great views, premium neighborhood, and fabulous finishings) are still commanding spectacular prices. Last month, for example, a Millennium Tower buyer plunked down $11 million for a yet-to-be-built 4,800 square foot penthouse—that’s $2,289/square foot. More data about the healthy upper-end market for new homes in downtown markets is in a Chronicle article last month.
Sales prices for resale luxury properties also remain robust– recent property transfers at above asking sales prices include a Pacific Heights full floor condominium at 1940 Broadway that took in a vista of just about everything, from the Golden Gate to the tip of the Transamerica Pyramid. Listed for $4,350,000, it closed last week for 10+% above asking at $4,911,000. Another jewel-box apartment home with less square footage (my memory is that it was 1250-1300 square feet) was a co-op at 2250 Hyde listed for $2,300,000—this quintessential San Francisco home had sensational views that encompassed the Bay Bridge, downtown, Alcatraz and the Golden Gate. The price per square foot seems staggering to someone not familiar with the location and building, but it was snapped up for $2,400,000.
Overbidding is less common and negotiating gets a bit more aggressive for upper-end single family homes. In reviewing prices for houses in the North District (Pac Heights, Russian Hill, Nob Hill and Telegraph Hill), I found that even the showiest homes rarely sell much above their asking prices. Examples are a classic Presidio Heights home at 2756 Jackson with 4 bedrooms and 6+ baths (1.5 baths for every bedroom!) with an extra wide lot and “park-like gardens.” Listed for $5.5M, it sold for same. A completely different kind sale on Telegraph Hill was 281 Chestnut, a contemporary 4-bedroom, 3.5 bath—listed for $5,995,000, it sold for $5,939,000.
These sales at-or-around the listing price indicate caution in the marketplace and pricing strategies are changing. Last spring, we might have suggested listing prices a hair below market value to encourage overbidding. Today we do our best to assess a property’s present value and ask Sellers to be prepared to take an offer at their asking price.
********************************
This entry was posted
on Saturday, March 8th, 2008 at 5:09 pm and is filed under Miscellaneous.
You can follow any responses to this entry through the RSS 2.0 feed.
You can skip to the end and leave a response. Pinging is currently not allowed.
Posted in Miscellaneous
Leave a Reply
