With a new presidential administration coming in and tech stocks taking a dive, many construction market forecasters seem to want to err on the side of caution. But while the rest of the construction industry is leveling off or even declining in some areas of the country, the high-end housing market shows no signs of slowing.
A record 15,595 new and existing homes are expected to sell for $1 million or more in 2000, according to DataQuick Information Systems, in a housing market analysis for USA TODAY. This represents a 51% jump from last year. While California will account for about 70% of those homes, other areas of the country are enjoying the continuance of the luxury home building boom.
"The Chicago condo market has been doing exceptionally well," says Tracy Cross of Tracy Cross and Associates of Schaumburg, Ill. "The condos and townhomes along the water on the Near North Side are running at about $350 per square foot. The suburban market has been strong but flat, with the exception of the highly touted school districts and the knock-down markets."
Manhattan accounts for many of the non-California luxury home sales. According to Adrienne Albert, president of The Marketing Directors, Inc. in Manhattan, the market is only getting stronger. Total sales increased only slightly over last year, but average sales prices rose so sharply that total sales volume increased from $1.9 billion to almost $2.5 billion this year.
"The prices are astounding. The top-end condominiums are going for $3000 per square foot, and $18 million townhomes are not uncommon," says Albert.
Multimillion-dollar estate homes (both new and resale) continue to sell well in the region, but it may take a little longer to sell them this year. "Still, builders are getting their asking price or close to it," says Albert.
In Las Vegas, where the overall market enjoyed steady growth, the high-end market has spiked. Eighteen percent of all home sales last year involved homes exceeding $250,000, an unprecedented sales level in a market historically known for affordability, according to The Concord Group, a San Francisco-based real estate analysis group.
Adam Ducker, a senior consultant with the group, says that the upgrade and executive housing markets have been gaining significant depth and he expects that to continue. "We’re expecting continued strong growth... in the Las Vegas market. The outlook for high-end home sales in the next 18 months is very optimistic," says Ducker.
Across the country, the buyer profile with the most growth has been the young, busy, dual-income professional family, but especially in Vegas.
"Targeting the family buyer is key to success in the high-end market," says Ducker. "The best-selling developments have been marketed heavily to affluent families."
Even while many may be growing ever more cautious with their finances in the immediate future, none of these analysts see any reason for luxury builders to feel too wary. Some see investor caution as helping to slow construction activity with the rest of the economy, avoiding the overbuilding which hurt so many in the early 90s. Some see home buyers as shifting assets - using high-end homes as safe investments that may have otherwise gone into stocks. And some predict the Federal Reserve will lower interest rates and engineer a soft landing for the market.
Or, as Adrienne Albert puts it, "Unique properties are always in demand and command nose-bleed prices."