Expectations for a market recovery in luxury real estate--- an illusion.

Expectations for a market recovery in luxury real estate--- an illusion.

 

This time we want to share some important information about the trends of the luxury real estate market in Costa Rica.  Last year the market was very slow and with few exceptions, merely homes with large discounts got sold.  The truth is that in year 2010 most luxury homes were sold with discounts in the range of 20% up to 50%, which is bad news for home owners who are obviously hoping to sell under better terms. 

 

There are of course exceptions, but the general rule for luxury home buyers is to get the largest discount possible out of the deal.  Basically, there are strong reasons for this.  Firstly, most properties in the most popular markets have suffered aggressively as a result of the real estate and financial crisis.  This article is an example, “in more than a decade, the average price of a home in Orlando dropped to less than $100,000” http://www.propertywire.com/news/north-america/orlando-real-estate-prices-201009244528.html.  Secondly, “cash is the king” and most sellers will negotiate and take a cash offer instead of taking the risk of waiting month after month for another cash buyer to come by.  Thirdly, buyers come under the preconception that properties in Costa Rica are overpriced, and this is a high price sellers are paying as a result of the tendency in Costa Rica to put prices that are way out of actual market conditions.   

 

Understanding challenges and concerns facing buyers and sellers and listening to client’s wants and needs is more important than ever.  With a constantly changing market it is important to understand market challenges and the facts that lead the decision making process, for both buyers and sellers. 

According to the Institute for Luxury Home Marketing,  “the luxury market has already started to outperform the overall housing market. The affluent are revaluating where to invest. Many are putting their money into residential real estate. Real recovery may be a couple of years ahead.”  Additionally they add:  “Unless we have some “wild card” economic event that sends everything spiraling down, the wealth recovery will continue and it will continue to be more global. North America and Europe will enjoy increasing numbers of wealthy, but China, Russia, Turkey, Brazil and many other countries will see an even greater percentage growth in the number of wealthy households.”  For different socio-economic-political reasons, we can expect to see an increasing number of Chinese and South American prospects coming to buy property in Costa Rica.   Attitudes of luxury home buyers for year 2011 are described by the ILHM as: Are demanding more and better information about the market and the property Are looking for value, will negotiate price, and are looking for prices well below those of 2006 and 2007 Are skeptical of pre-construction offerings Are often looking for lower-key, less flashy properties Want neighborhoods with available health care, low cost of living, and safety (especially if they are boomers) View green as desirable; however, maybe not, if price is higher Want seamless service which saves them time Are looking for lifestyle experiences and stories to tell In general terms the luxury home buyer is looking for “quality at a bargain”, here is a great example of that:  http://www.costaricamilliondollarhomes.com/Casa-Hacienda-Cielo-Azul/index.html and the internet has become the most important source for gathering housing information and reviewing properties online.  In light of this, luxury homes should be presented with distinction and elegance  http://www.costaricamilliondollarhomes.com/Casa-Celebrities-Mansion/index.html  ; information should be clear, detailed and professional,  http://www.costaricamilliondollarhomes.com/Casa-Villa-Los-Laureles/index.html thinking about the type of reader who will be reviewing the information online, and what they expect in return out of their time on the web.    On the other hand, luxury home buyers are very protective of their privacy and handling of the information should be done with sensitivity.  Our company, Costa Rica Luxury Estates, is a boutique luxury real estate company, with restricted access to the information of buyers and sellers, it gives both sides of the transaction the assurance that the information is handled with care and will be kept confidential at all times.   Here are some good news we also wanted to share with you, according to a study by the Institute for Private Investors published in the Wall Street Journal, very wealthy families will be looking to move money out of the U.S. this year, and 30% of them are planning to invest in real estate overseas:  http://blogs.wsj.com/wealth/2011/01/05/rich-investors-plan-to-pour-money-overseas/ “With America’s millionaires holding more than 80% of the nation’s publicly traded stocks, their decisions can move markets.  A drop from 81% to 68% means that more than $1.3 trillion is being re-directed by the wealthy from the U.S. to Latin America, Asia and other parts of the world.”   Taking all of this into account,  we are committed to continue innovating and setting a standard for quality, in the competitive world of the real estate market, focusing our efforts in giving the luxury home market a distinctive treatment.