I’m being a bit ironic with the headline here— but a recent survey of luxury homeowners tells us that when it comes to real estate, the affluent have more realistic expectations. They don’t freak out about temporary market fluctuations. Housing slump, shmousing shlump, they say.
The 2007 Coldwell Banker Previews International Luxury Survey polled 301 U.S. homeowners whose primary residence is valued at over $1 million ($2 million for California residents) and who have investable assets of more than $1 million. The big trend: a full 56% of respondents expect the value of their home to increase “at least somewhat” in the next year, though only 10% expect it to increase “significantly.” Looking at the next five years, 36% think their home value will increase significantly, while 58% believe it will increase “at least somewhat.”
“These responses tell us that the affluent truly understand the value in owning real estate,” said Coldwell Banker pres. Jim Gillespie in a press release. “It is important to remember that in addition to being a home, real estate is a long-term investment, one that can withstand periodic changes in the market.”
Of course rich people understand value—that’s how they got rich, right? ;) It is true that if more people had looked at homes as a long-term investment, we wouldn’t be in as much of a pickle today. But as we’ve pointed out in the past, homeowners in the exclusive enclaves at the top of the market have the added benefit of steady demand that continues to push prices up (See Peter Coy’s story on this phenomenon).
Another interesting finding from this survey: well-heeled ladies are more optimistic then well-off fellas, with 61% of women expecting their home value to increase somewhat in the next 12 months versus 50% of men. Gillespie suggests that affluent women’s confidence in real estate, along with the fact that 22% of all homes sold last year were to single women, could be “the driver that ultimately helps the market turn the corner.” I suspect Oprah is behind this…
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.