What is Luxury Real Estate?
What exactly is a luxury home? Does it depend on price, location, the square footage or a combination of these factors?
For starters, luxury real estate is not just about spending a lot of money on a purchase. It is much more subjective and it’s a moving target, based on the expectations of high-end customers in a certain area.
It’s not just a price-per-square foot metric. Many times, luxury is in the eye (or wallet) of the neighbor who has the most money. Our team has years of experience helping buyers find luxury homes for sale in Savannah. So feel free to reach out. We would love to help!
6 Things that constitute luxury real estate
Although there is some variation, luxury homes tend to share certain characteristics. If you are looking to purchase a luxury home or trying to describe your current living space in such opulent words, then here are some qualities that you should expect.
1. High price for the area
A “luxury price” depends on where you reside. A house worth a million dollars in Los Angeles will probably not be considered luxury real estate. However an equally priced property in a suburb of Savannah would be.
2. Prime location
Luxury homes have the best locations in any city, state or country. They can be on top of a mountain or right on the coast, or they can overlook the glittering lights below. These areas are always expanding and changing: a new strip of trendy restaurants and bars can transform an average area into one that attracts high end buyers.
3. High quality
Construction materials, finishes and appliances must all be above standard in luxury real estate. Luxury homes are often adorned with marble, hardwood, Venetian plaster, crystal and high-end appliances.
4. Luxurious amenities
Luxury homes have the best amenities, including home theaters, arcade rooms, in-home gyms, huge closets, and spa-quality bathrooms. These luxury features can often sell the property all by themselves.
5. Privacy
High-end buyers, especially celebrities who are constantly harassed by paparazzi or fans in public, want their homes to feel like a refuge. Privacy is therefore a top priority. This can be achieved with large yards and high walls with foliage to provide cover. Private neighborhood entrances with security guards present are highly sought after.
6. Provenance
You will be surprised. Luxury home buyers don’t necessarily just want flashy mansions. But they are looking for a story or history in their house. The value of a home that is not a tract house increases if a well-known architect built it or if the location is notable.
The definition of a “luxury house” ultimately depends on the individual.
Luxury can be the quality of construction, location, and size of a house. But it’s also very personal. Luxury can mean living in the city with panoramic views for some and a private beach on the ocean for others. Others would define luxury as a Mid-Century Modern house with all the high-tech gadgets.
What is the cost of a luxury house?
Seven figures for a single family home is a widely accepted standard for what defines luxury. According to the Institute for Luxury Home Marketing’s August report, the median price of a luxury home in the United States was $1.31 million as of July 20, 2022. The Institute has set a median threshold of $912,500 as the price for luxury homes.
Redfin also comes up with a similar number, defining luxury real estate in a given region as the top five percent of all properties based on their market value. In its analysis, the real estate brokerage found that luxury sales were expected to reach $1.15m in early 2022.
This is what the criteria suggests: It depends on the average sale price in your market. The threshold varies greatly by region, zip code or country. In Philadelphia, for example, the average price of a home is $350,000. This means that the luxury market begins at around $700,000. On the Philadelphia Main Line, the traditionally affluent suburbs to the west of the city, the luxury market begins at around $1 million.
You may need a jumbo mortgage if you plan to borrow more money than the amount set by government-sponsored agencies Fannie Mae or Freddie Mac. You’ll need to have a good credit score, a low debt-to-income ratio (DTI), and preferably hefty cash reserves or assets in order to qualify for this type of loan. Be aware that some sellers may require proof of funds before allowing a buyer to view the property.
You can narrow down your search by working with a luxury real estate agent who specializes in luxury homes.
Bottom line on luxury real estate
As you can see, luxury real estate can be defined in many ways. Instead of automatically falling for a listing that uses this term, consider the features you want to see in a house to find a place you love.
Luxury real estate transcends the mere metrics of price, location, and square footage to embody a lifestyle and a statement of personal achievement. It’s about the exceptional quality, unique history, and exclusive amenities that cater to the desires and needs of the affluent. Whether it’s a sprawling estate with a storied past, a cutting-edge urban penthouse, or a secluded beachfront villa, luxury homes are as diverse as the individuals who seek them. For those in the market for luxury real estate, the journey is not just about finding a place to live; it’s about discovering a space that reflects their highest aspirations and a sanctuary that feels like a personal retreat from the world.
