Luxury Home Buying Guide: What’s Considered Luxury Real Estate?
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Luxury real estate is a type of property that is characterized by high-end living conditions and amenities. Luxury real estate can be defined as the type of property that provides high-end living conditions and amenities. This type of property has been around for centuries, but it was not until the late 1800s when it was recognized as a separate category.
The word "luxury" has undergone many changes throughout the years. In antiquity, luxury referred to the quality of being exceedingly well-off and in possession of worldly goods and resources that were not needed on a day-to-day basis. Over time, luxury came to mean something more refined such as self-indulgence or excess.
As explained by author and historian Paul Johnson, luxury is the "luxury of being able to give yourself" (Johnson). Luxury goods are typically those that are more difficult or time-consuming to make and not for everyday use.The definition of luxury real estate changes with every generation.
In the 20th century, luxurious properties were high-end homes built in large amounts. In the 21st century, luxury real estate has evolved to include properties bought with cash. This includes $1 million and $10 million homes, as well as smaller homes around the world.Answering this question requires understanding a few key concepts about luxury residences. First, there is what is classified as "high-end" real estate by today's standards . High-end properties are typically built in large amounts, have luxurious amenities, and are not for everyday use. Second, there is what is classified as "high net-worth" (HNW) real estate by today's standards. HNW real estate is made specifically for those who have high incomes and/or a high net worth.
Lastly, there are the most common properties that are built in small quantities, typically low-end homes, but with amenities considered luxury. In general, a house is considered to be "high-end" when it is built in a large amount, has luxury amenities and is not for everyday use.
For example, a high-end home would have an expensive home theater system or an elevator in the house. Generally, the definition of "high end" does not include apartments or condominiums because these properties are for living in and not for show. Some examples of "high-end" homes that people use as investment properties might be a mansion or a penthouse on Park Avenue in New York City.
What does a luxury home cost?
Well, if you have to ask, you probably can’t afford it…
Seriously, in dollar terms, seven figures for a single-family home seems to be a generally accepted figure around the U.S. for defining what’s luxe. In terms of real estate nationwide, the median luxury home sales price as of July 2022 was $1.31 million, according to the August report of the Institute for Luxury Home Marketing, a credential-awarding and research group for real estate agents specializing in high-end residential properties. (The Institute sets a median threshold price of $912,500 for luxury homes).
Coming up with a similar figure is Redfin, which defines luxury real estate as the top 5 percent of properties, based on market value, in a region. The real estate brokerage’s analysis of luxury sales in early 2022 found that the national median sales price for this segment was $1.15 million.
But as Redfin and RE/MAX Collection’s criteria suggest, luxury can be relative: “It all depends on what your average sales price is in your marketplace,” says McCann. Since this varies dramatically nationwide, so too does the threshold per region – or even zip code. For example, in his area, Philadelphia, the average home sales price is $350,000, so the luxury market in the city really begins around $700,000, he explains. However, on the Philadelphia Main Line — the historically tony suburbs west of the city — the luxury market starts around the $1 million price point.
What features define a luxury home?
Of course, high prices reflect certain features in a home. But which features? “Luxury means different things to different people,” says McCann. “For some it means the home is filled with high-class modern amenities, for others it might be all about the location, and some people would define luxury real estate as a unique product filled with character and charm.”
“Like art, there are factors other than price that can truly make a home extraordinary and deemed a ‘luxury property,’” says Natalie Hamrick, executive vice president, Americas at Christie’s International Real Estate. “For example, if a notable architect is used, the property has a unique history or famous previous owners, or there are unique land features.”
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