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Luxury consumption — even for those who can still afford it — is falling out of fashion. Some wealthy Americans are cutting back, not out of necessity, but because it seems a tad bit unseemly to be spending while so many families are struggling with job losses and foreclosures.
In my story, “Is Living in a High-End Suburb Worth It?,” published this week on BusinessWeek.com, I asked financial planners what they thought about the costs associated with living in a pricey Zip code. Many of them said they advise clients to avoid prestige because it often comes at a premium and to seek out affordable communities with good schools and low crime.
Of course, not everybody needs to worry about costs. And there are many reasons to live in high-end communities, which are expensive for a reason (Often, they’re beautiful private enclaves with great schools and amenities). And moving out is not a good option for many people because mansions are tough to sell in this economy and families have deep connections to friends, churches and schools.
I’m more interested in what you think about the value of buying a home in one of these communities. Home prices in luxury neighborhoods from San Francisco to Greenwich, Conn. are dropping quickly. So if want a lifestyle upgrade, now is the time. It is certainly possible that the luxury Zips will appreciate more than other places when the real estate market recovers. But I guess that depends on how long this environment of frugality lasts.
My question is how much is prestige worth to you?
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.