Luxury Returns to Housing
January 27, 2014
Following the recent recession, interest in large and expensive homes dropped dramatically as home buyers showed preferences for smaller, more affordable homes. But house hunters are being attracted to luxury home features once again, as the affluent buyer steps back into the market. In July 2013, sales of homes costing more than $1 million rose 46.6 percent from the previous July.
“The housing market is being driven by the move-up buyer, the luxury buyer,” Brad Hunter, chief economist and director of consulting at Metrostudy, told The New York Times. “And those who have strong incomes, secure jobs, their stock portfolio is doing well — they are able to buy whatever they want. And what they are buying is larger houses.”
In 2007, the median size of new homes built for sale peaked at 2,295 square feet. That number fell to 2,159 square feet in 2009. But in 2012, new-home size increased to a new peak of 2,384 square feet, according to the National Association of Home Builders. What’s more, about 41 percent of new homes had four or more bedrooms, up from 34 percent in 2009.
Homebuilder Toll Brothers, which caters to the luxury market, reported its revenue rose 65 percent in the fourth quarter over last year’s numbers. The average sales price of Toll Brothers' homes rose 21 percent during that time too.
Homes with the largest kitchens and most expansive master suites are the top sellers nowadays, says Tim Gehman, design director at Toll Brothers. “It’s a matter of how large and impressive those two features are and how much buyers can afford,” Gehman says.
Also, affluent buyers seem to be lured to established suburban communities that are near job centers and have good schools. They are showing less interest in the large homes – often dubbed "McMansions" – in the exurbs that were popular during the housing boom years, says Lawrence Yun, the National Association of REALTORS®’chief economist.
Source: “In Housing, Big Is Back (Not Counting the Extras),” The New York Times (Jan. 25, 2014)
Updated: October 18, 2019