Where are the rich buying their homes?
In the first half of 2023, the Greater Los Angeles area came out on top, according to the Compass mid-year ultra-luxury report.
While sunshine and Hollywood may be big draws, there may be a bigger reason for the surge in sales in the area.
One of the primary drivers behind ultra-luxury deals in Greater Los Angeles was the mansion tax deadline, which motivated buyers to act, according to research by Compass Real Estate. That resulted in the sale of 160 ultra-luxury deals during the first half of the year, with a total sales volume of $3.21 billion.
Greater Los Angeles is No. 1 for total transactions and sales volume in the ultra-luxury segment of sales of homes over $10 million, followed by Manhattan, Miami Dade, and Palm Beach County in Florida.
The luxury tax approved by voters in Los Angeles kicked in as of April 1, 2023. Known as the mansion tax, it adds 4% more tax on properties that sell for $5 million or more. For properties that sell for $10 million or more, the additional tax is 5.5%. The additional tax revenues are to be used for affordable housing and homeless programs.
Overall, historically wealthy coastal areas like Greater Los Angeles and Manhattan continue to appeal to affluent buyers.
In the first half of the year, $13.85 billion in ultra-luxury real estate traded across 806 transactions across the country.
"While the traditional coastal markets continue to thrive, we are seeing inspired interest in unique homes and estates in markets that just a few years ago had little to no activity at this level," Felipe Hernandez Smith, head of the Compass luxury division, said in a statement.
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Because of the cost of living, several cities are experiencing a decline in population.
Compass, a national real estate firm, analyzed residential transactions of $10 million and above across 76 U.S. markets during the first six months of 2023 in its ultra-luxury report. Other than coastal cities, the report shows that properties in vacation and second-home markets as well as low-tax areas such as Florida are selling at higher rates than last year, despite limited inventory and higher interest rates. Locales such as Scottsdale, Arizona, and Jackson Hole, Wyoming, are emerging in the top 20 list for ultra-luxury homes.
The impact of interest rates on high-end buyers is minimal, as the majority of clientele with budgets exceeding $10 million opt to purchase properties using cash, said Nick and Kari Giuffre, agents at Compass Real Estate in New Jersey.
High-end clients value buying fully furnished, turnkey residences because it bypasses the long process involving architectural planning, construction and design, according to Nick and Kari Giuffre.
Here are the top 10 markets for luxury home sales of over $10 million as of June 20, 2023, based on the number of sales transactions.
1. Greater Los Angeles, California, with 160 transactions.
2. Manhattan, New York, with 124 transactions.
3. Miami Dade, Florida, with 61 transactions.
4. Palm Beach County, Florida, with 54 transactions.
5. The Hamptons, New York, with 34 transactions.
6. Aspen, Colorado, with 32 transactions.
7. Silicon Valley, California, with 31 transactions.
8. San Diego, California, with 30 transactions.
9. Southwest Florida, with 28 transactions.
10. Hawaii islands of Hawaii, Kauai, Oahu and Maui, with 27 transactions.
