Usual Suspects Lead List of Luxury Housing Markets
California, New York and Florida.
It’s no big surprise that this luxury-home trifecta topped the list of states with the most homes valued at $1 million or more in 2005.
The rich may get richer and the homes pricier, but the lineup of the biggest luxury real estate markets changes little from year to year.
What makes these states perennial winners in the jumbo mortgage category? The obvious answers, year in and year out: lifestyle and jobs.
Earthquakes, fires, and smog have done little to deter wealthy home sales in the Golden State, powered by California’s mild weather and striking coastline, and the technology and entertainment industry hubs that are the major cities. Nothing beats New York for cultural offerings and opportunities in the financial world, or Florida for miles of prime vacation land.
Having a lot of homes in general also may give the top three an edge over other states, where standard home loan costs are more typical. California has the highest population in the U.S. (36 million), followed by Texas (23.5 million), New York (19 million), and Florida (18 million).
In 2005, California had 619,170 $1 million-plus housing units, or 8.76 percent of its total homes. New York had 165,641, or 4.21 percent, and Florida had 102,010 or 2.08 percent.
But the California housing market also has the highest percentage of total homes valued at $1 million or above, followed by Washington, D.C. (7.67 percent), Hawaii (6.64 percent), and Connecticut (4.41 percent).
The other states rounding out the top 10 largest luxury home markets are New Jersey, Massachusetts, Illinois, Connecticut, Virginia, Maryland, and Washington — all states with or near major U.S. cities, and almost all, with the exception of Illinois, along the coast.
“There was the expectation here a few years ago that the coast had seen most of their increase in home prices, and estimates were that the middle part of the U.S. was going to catch up a bit,” says John Karevoll, an analyst at real estate research firm DataQuick.
“That hasn’t happened yet, and it’s surprised a lot of analysts.”
In fact, the finite amount of waterfront space in coastal states has pushed prices up at the ultra-luxury end. The Institute for Luxury Home Marketing estimates that home sales at the $5 million-and-above price rose 11 percent in 2006, compared to a 8.4% decline in overall housing market sales.
Between 1999 and 2005, when low mortgage rates fueled a record-shattering home-buying boom, the Institute says sales of homes for more than $1 million skyrocketed over 500 percent.
The most expensive home sold in 2006 was a 63-acre estate with a 10,000 square-foot mansion in Alpine, N.J., purchased by Advanced Photonix CEO Richard Kurtz for $58 million. Chances are good no mortgage was involved in this particular purchase.
If Wall Street’s streak continues, New York could even steal California’s first-place spot in the next few years. From 2000-2005, New York saw home sales at the $1 million-plus level rise 531.7 percent, the greatest jump among the U.S. states.
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