Affluent home buyers are enjoying the upper hand in today’s luxury market, and they are cautiously optimistic about the future. According a survey by YouGov Affluent Perspective, ultra-wealthy buyers in the U.S. and abroad are showing resilience against geopolitical uncertainties and global economic headwinds.

Ultra-wealthy home buyers are defined as individuals with over $50 million in net worth. CNBC reports that there are more than 123,000 people in this growing category, with this demographic increasing by 53% in the past 5 years alone. Most reside in North America, where the rate of growth among the ultra-rich is double that of Asia, and growing significantly faster than Europe.

Interestingly, U.S. luxury home buyers are a bit more cautious than their global counterparts, possibly due to a contentious election year. About 25% of wealthy individuals in the U.S. intend to buy a new home within 1 to 3 years. Meanwhile, 45% of wealthy individuals from other countries intend to buy a new home within 1 to 3 years.

This is good news for luxury home sellers who have endured slow sales and softening prices. In fact, the surveyed group shows less propensity to sell than buy. Only 18% of affluent individuals in the U.S. expect to sell a home in the next 1 to 3 years. Only 23% of wealthy individuals from other countries intend to sell within the next 1 to 3 years. Overall, there is stronger interest in buying!

In other words, we could be seeing a very different Houston luxury market in future months. Affluent individuals are growing in number around the world, and the ultra-wealthy tend to own 2 or more homes. Once the U.S. election year is over, and fiscal polices made known, we could reasonably expect that more U.S. luxury buyers will get off the fence.

Need more information about buying or selling luxury homes in Houston? Contact us today for your personal luxury real estate consultation!

KW Energy Corridor Team
Michael Bossart

11757 Katy Fairway | Suite 930
Houston, TX 77079
908-872-9332

Houston home builders are using a cautious strategy for luxury home development, according to a recent article in the Houston Business Journal. The energy sector slump has slowed the pace of Houston luxury home sales during 2016, which creates cash flow challenges for builders who operate on relatively narrow margins. The longer it takes to sell a home, the less capital a builder has available for their next project. There are three major trends emerging as a result.

Houston home builders are focusing on smaller lots in the city and suburbs, as land acquisition costs have risen. Move-up home buyer tastes are also trending towards smaller, lower-maintenance lots in walkable communities.

Home builders are avoiding neighborhoods that have been heavily impacted by the energy sector decline, such as the Memorial area. While this area remains coveted for its beautiful, well-constructed homes, good schools and abundant amenities, it is also home to a large number of energy sector employees. Consequently, while Memorial homes are still selling for good prices, home inventories are higher, and home sales are taking longer.

Seeking quicker home sales, luxury builders are actively targeting neighborhoods that are home to a large number of medical professionals, particularly in the south and southwest portions of the city.

Overall, luxury home builders are seeking the most profitable locations with the fastest possible home sales. While this is nothing new, current economic conditions are driving new luxury home development into a variety of neighborhoods.

This can present both opportunity and challenge for luxury home owners who plan to sell. Luxury homeowners in the Houston Energy Corridor and Memorial area will face less competition from new homes in the near-term.

However, homeowners living near the Texas Medical Center may find new luxury homes popping up in unexpected places. New development can improve local home values, but it can also provide competition to sellers of older homes.

Need more information about luxury homes and fine neighborhoods in Houston? Contact us today for your personal luxury real estate consultation!

KW Energy Corridor Team
Michael Bossart

11757 Katy Fairway | Suite 930
Houston, TX 77079
908-872-9332

In recent years, home buyers from China have been among the most prolific investors in U.S. luxury real estate. During 2016, the number of Chinese buyers has declined. This has affected Houston luxury real estate to some degree, and has been felt sharply in the New York and California markets. Here is a summary of what’s happening, with points from Bloomberg magazine, and our own insights:

China’s government is protecting the yuan and its foreign exchange reserves. Chinese currency depreciated 4% during 2015. The onshore yuan fell 2.92% against the U.S. dollar this last spring, representing the biggest quarterly drop since 1994. After seeing an economic outflow of $108 billion in December 2015, China established new regulations to control the outflow of cash to other countries, intentionally slowing foreign investment. China has also cracked down on illegal banks and other mechanisms that allowed its populace to funnel fortunes out of the country.

Chinese buyers pay in cash when buying U.S. real estate, and new regulations affect them. As a burgeoning Chinese economy created new millionaires, Chinese investors sought the safe haven of U.S. real estate, making all-cash purchases. During 2015 alone, Chinese buyers spent $28.6 billion in U.S. real estate. Since the regulatory changes took effect, that number has fallen to $27.3 billion.  The number of units purchased also fell, from 34,327 units to 29,195 units.

China’s economy is slowing. While the U.S. would envy this kind of “slowdown,” the decline of economic momentum in China signals that it may have finally reached a ceiling. China’s economy expanded by 6.9% during 2015, with 22 of the mainland’s 31 provinces decelerating from a year earlier. This is China’s slowest economic growth in 25 years. The milestone has caused concern for the Chinese government, which seeks to avoid a devaluation of the yuan.

Chinese buyers are adjusting, not retreating. 

According to industry analysts, U.S. luxury homes priced between $2 million and $3 million have been among the most affected by the tapering of cash flow from China. As Chinese buyers work to comply with new regulations, they have been spending less per transaction, and buying fewer properties. Yet U.S. luxury real estate remains attractive for Chinese investors, who have inched back, but have not fled the market.

Looking to sell your Houston luxury home? The KW Energy Corridor Team can help you attract buyers from around the block, or around the globe! Contact us today for your complimentary market analysis and personal consultation.

KW Energy Corridor Team
Michael Bossart

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Houston, TX 77079
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A 2015 study by Wealth-X analyzed the luxury real estate holdings of ultra-high net worth individuals around the world. To be defined as an Ultra-high net worth individual, (UHNWI) one must possess investible assets of at least $30 million, excluding personal assets, such as a primary residence, collectibles and consumer items. Ultra-high net worth individuals are categorized as the richest people in the world, controlling the lion’s share of global wealth.

As of 2015, the global population of ultra-high net worth individuals was about 211,275. Naturally, this demographic has a large influence on luxury real estate values, both in their home countries and abroad. Here are some interesting findings from the study!

These individuals make their luxury real estate decisions based on three distinct values: emotional value, practical value and business value.

  • Emotional value is weighed by the property’s proximity to family, and how well the location suits their daily lifestyle.
  • Practical value revolves around the standard of living and institutional setup.
  • Business value centers on the home’s proximity to local industry and the buyer’s financial base.

Ultra-high net worth individuals are very active in the luxury residential real estate market, with 79% of them owning at least two properties. About 50% of them own at least three properties. Here are other findings from the study:

  • UHNWI’s buy and sell real estate frequently, averaging one transaction every three years.
  • $2.9 trillion of their wealth is held in owner-occupied residential real estate.
  • UHNWI’s are increasing the number of properties they hold outside their home countries. The top 3 favorite locations: the United States, the United Kingdom and Switzerland.
  • Over 7% of UHNWI’s have made their wealth through real estate, up from 5% in 2013.

Ultra-high net worth individuals are increasing in population and in wealth, with self-made millionaires in the United States, China and Russia leading the growth.

The study’s findings suggest that domestic and foreign investment in luxury real estate will remain strong for the foreseeable future. While the energy sector decline and political uncertainties have slowed Houston luxury real estate sales during 2016, projections for the long-term are optimistic.

Need information about Houston luxury homes and the latest sales trends? Contact us today for your personal luxury real estate consultation!

KW Energy Corridor Team
Michael Bossart

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Houston, TX 77079
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After a year-long slump in sales volume amid softening home prices, the Houston luxury market is showing signs of revival. According to the Houston Association of Realtors, sales of single-family homes priced at $500,000 and above surged by 5.8% during August 2016.

As a whole, existing home sales totaled 6,815 in August, up 8.2% year-over-year. The average sales price rose 3.4%.

The fresh sales momentum is welcome news for Houston’s luxury home sellers, who have endured weakening prices and longer days-on-market for the past several months. However, energy sector declines continue to affect portions of the luxury market, and not every neighborhood is experiencing a sales rebound. For example, luxury home sales in the Memorial neighborhoods are doing a bit better than those located in Katy.

Long-term, Houston’s luxury real estate market has reason for optimism. According to the Houston Business Journal, new residents continue to be drawn to the city, despite the energy sector downturn. Houston added 159,000 new residents last year, and the city’s economy keeps growing, thanks to advances in the medical, petrochemical and shipping industries.

For the balance of 2016, luxury home sellers should continue to remain patient and flexible. Sellers at the top strata of the market should keep in mind that it can take 1 to 3 years to sell a multi-million dollar home, depending on the location, lifestyle, amenities and material qualities it presents. Of course, each local real estate market is unique, and each luxury home must be evaluated according to its distinctions. Obtaining the expert advice of an experienced luxury real estate agent is your first step for a successful sale.

Contact us today for your personal luxury real estate consultation!

KW Energy Corridor Team
Michael Bossart

11757 Katy Fairway | Suite 930
Houston, TX 77079
908-872-9332

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Unlike typical buyers, Houston luxury home buyers are not motivated by low mortgage interest rates. They also feel less pressured about home inventory, as the luxury real estate market has an ample supply of homes on the market. With no sense of urgency to goad them on, Houston luxury home buyers are exercising caution due to weakness in the energy sector, and doubts about future fiscal policy in an election year.

Yet luxury home buyers are seeing positive signals in the economy. The stock market had a strong summer, with the DJIA returning to lofty territory, climbing above 18,000. Meanwhile, energy prices have gradually stabilized, and concerns about China’s slowing economy are easing.

According to real estate analysts, luxury home buyers are keenly influenced by the direction of the stock market, as this represents a common source of down payment and home purchase funds. Therefore, issues that affect stock market performance – everything from looming elections to economic benchmarks – can make luxury home buyers feel more optimistic or discouraged, depending on the direction of the news.

Recently, more good news was added to the mix. During July, national employment figures posted a gain of 255,000, beating the month’s forecast of 180,000. Wages and hours worked per week both saw some improvement over the prior month.

Employment strength indicates a healthy business climate, which in turn leads to profits and stock market gains.

Here in Houston, our employment figures are improving after a bumpy start in the first quarter. While our local economy feels the brunt when there is softening in the energy sector, our diversified industries are adding jobs. We detailed some of this in our prior blog post.

Houston luxury home buyers who plan to hold property long-term, have some excellent opportunities today. Luxury home sellers are negotiating, and there are beautiful homes for sale in some of West Houston’s most desirable neighborhoods.

Contact us today for your personal luxury real estate consultation!

KW Energy Corridor Team
Michael Bossart

11757 Katy Fairway | Suite 930
Houston, TX 77079
908-872-9332

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Houston luxury homes have seen softer prices during 2016, and the trend is likely to continue for the balance of the year. The latest report from the Houston Association of Realtors indicates that home inventory in the price range of $500,000 and up continues to rise. At the same time, Houston luxury home sales are slowing, with July 2016 sales activity down by 21.7%. compared to last year.

Luxury real estate markets have slowed nationwide, and analysts attribute this to multiple factors. Foreign real estate investment has declined due to a strong dollar, and there are new Treasury Department requirements on all-cash LLC purchases. Concerns over Brexit and election-year uncertainties have caused some luxury home buyers to delay purchases. Here in Houston, a weakened energy sector has led to corporate restructuring and a reduction in executive recruiting.

However, we must remember that 2015 was a very strong year for Houston real estate. When we take the long-term view, Houston luxury real estate holds a great deal of future promise. According to a recent article in the Houston business journal, Texas recorded $48.3 billion in capital investments during 2015, placing it #1 in the country. Chemical and fuel manufacturing represent about 40% of capital investments, with much of it including the Houston area.

Texas also ranks #1 for mobile project jobs. These include data and call centers, distribution centers, research facilities and manufacturing facilities.

According to the Greater Houston Partnership’s “Economy at a Glance” report, Houston added 5,500 jobs in June. The strongest industries for hiring include leisure and hospitality, manufacturing, and professional and business services. Of these sectors, professional and business services grew by 1,600 positions, reflecting the strongest month-to-month gain in the past year.

While the current market conditions require patience from Houston luxury home sellers, home buyers have an excellent opportunity in front of them. Today’s advantageous rates for jumbo mortgages, and reasonable home prices, make it a smart time to buy a Houston luxury home!

Contact us today for your personal luxury real estate consultation!

KW Energy Corridor Team
Michael Bossart

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Houston, TX 77079
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Baby Boomers are a key element of Houston luxury real estate. Not only do they represent the second-largest generation in the U.S. (recently surpassed by Millennials) but they hold the lion’s share of personal wealth. Boomers control nearly 80% of the nation’s personal financial assets, and account for more than half of all consumer spending.

As of 2010, Texas was home to 3.8 million people aged 60 and older. According to the American Society on Aging, the number of adults aged 60 and older living in Houston grew by 34.2% from 2002 to 2009. Adults over the age of 60 are among the fastest-growing populations in Texas!

For this reason, real estate economists have attempted to predict the direction of the Boomer generation for years. Studies by the National Association of Home Builders suggest that Boomers prefer to live in single-family homes, located in subdivisions with shopping, dining and medical services nearby. This description brings to mind Houston’s Memorial and Energy Corridor neighborhoods, as well as The Woodlands and several other communities.

But will Boomers sell their luxury homes as they retire? Perhaps not. It has often been said that Boomers intend to age-in-place, and will retrofit their homes to accommodate changing needs.

Still, we often hear that Baby Boomers are likely to sell their homes and move to maintenance-free condominiums in urban centers. In some cases, this is already happening, with condominiums in downtown Houston attracting both Boomers and Millennial buyers. Yet this activity represents a relatively small portion of the Houston Boomer population, and falls well short of a mass exodus.

There is no one-size-fits-all answer for what Boomers will do. Like all other home buyers and sellers, Boomers will base their personal real estate decisions on their lifestyle and personal priorities. We can reasonably expect that Boomers will influence segments of Houston luxury real estate, and that generally, the impact will be positive.

Houston offers abundant luxury living, world-class cultural opportunities, and a diverse economy. Houston also has some of the best hospitals in Texas and in the country, as reported by the Houston Business Journal. The resilience of Houston’s luxury real estate market may rest on its ability to attract affluent residents from around the country and the globe!

Relocating, downsizing or trading up? Let us be your guide to Houston luxury real estate! Contact us today for your personal consultation.

KW Energy Corridor Team
Michael Bossart

11757 Katy Fairway | Suite 930
Houston, TX 77079
908-872-9332

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