Gone of the days of dreaming of buying a million-dollar mansion, these days trophy homes come with much higher price tags so you’re going to have to save more for a life of luxury.
While seven figures incites sticker shock, $1 million just doesn’t cut it anymore when it comes to snagging sprawling estates. This might not surprise most Americans house-shopping or paying off mortgages for new homes in major cities where home prices already hover just below and above the $1 million mark.
So what is the new baseline luxury price point and what does it buy you? Recent research in the real estate market reveals insight on how much luxury homes cost, and what kind of housing features and amenities the upper crust wants. Hint: it’s exactly as you imagined: stunning views, acres of land, and bespoke features – all wrapped up in a prime location.
What is the New Luxury Price Point for Housing in the US?
While the figures fluctuate depending on who is conducting the research, buying a luxury home cost somewhere between a cool $2 million to upwards of $5 million.
With $1 million dollar homes becoming commonplace, $5 million appears to be the new average threshold for luxury living, according to a 2018 report by Trulia. Across the 100 largest cities in the U.S., a whopping 4.3% of homes are already valued at $1 million or more – quadruple the amount listed in 2002.
Less than 1% of homes, however, were listed in 2018 at $5 million or more making these homes much more exclusive, but the rate has grown five times compared to 2002. In 2017 alone, the share of $5 million-plus homes increased by 19.8%.
Meanwhile, million-dollar homes are a dime a dozen depending on where you live. For homeowners in San Francisco, Oakland, or Long Island, seven figures is just the cost of putting a decent roof over your head, according to Trulia.
In San Francisco, $1 million-plus homes make up a full two-thirds of the housing market while $5 million or more made up 3%. In nearby Oakland, million-dollar plus homes make up nearly 24% of the available housing market. Long Island, home to the Hamptons, has the second highest share of $5 million homes at 2.2% of available homes.
Data suggests that a record-breaking 118,000 home sales were at or above $1 million in 2018. Luxury prices also skyrocketed that year, especially in cities like Nashville, Miami, parts of Florida and north Dallas.
On a global scale, the average starting price for a luxury home is $2 million, according to Luxury Defined, a 2019 report by Christie’s International Real Estate. About $750,000 could buy you a luxury home in South Africa, but in Beverly Hills, luxury market homes are about $8 million on average.
Redfin defines “luxury” as the top 5% price point in the 1,000 cities it tracks data on – through this methodology, that’s about $1.78 million as a cumulative average.
Now that we’ve outlined the new threshold for luxury housing, it’s time for the fun part…showing you precisely what the $5 million price tag (that’s 17.5 times more than the typical American home price!) buys you.
Your Home, Your Sanctuary
If you’re moving into luxury real estate, you’re definitively saying good riddance to cramped quarters whether you’re living in a dense city like Manhattan or in more spacious Phoenix.
Across the board, space is a luxury and this room to roam is what sets super-luxury homes apart from the rest. Luxury homes tend to have two or more bedrooms, four or more bathrooms and three times the square footage of those with lower price points.
A $280,000 home – the median home price of all listings in 2018, according to Trulia – comes with three bedrooms, two bathrooms and 1,865 square feet of living space. A $5 million home, on the other hand, comes with about five bedrooms, six bathrooms and a spacious 5,664 square feet.
The super-rich like their bathrooms – in cities with more than 100 super luxury listings, bathroom count tended to outnumber bedrooms, which never occurs in average- to lower-end priced listings.
Luxury homebuyers are like land, with a lot more outdoor space to the tune of 0.94 acres compared to just 0.22. These luxury listings include words like “estate,” “acres” and “park-like” grounds.
In Dallas, for example, the median luxury home is 4.5 times bigger than conventionally priced homes, measuring a massive 10,801 square feet compared to only 2,349 square feet for other homes in the area. In Ventura County, Calif., $5 million properties had an average lot size of about 4.67 acres compared to 0.16 acres for average-priced homes. With that much space, you’ll need a groundskeeper to boot.
Location, Location, Location
Geography plays a significant role in how much a home is valued. Properties in major global economic hubs like New York and San Francisco will easily command higher prices than less populated cities. Wherever they call home, those who can afford to live in trophy homes still want to be in the thick of it, though.
In Christie’s Luxury Defined report, it broke down location according to various categories, such as being a global economic hub, a busy metropolitan city, or a popular home for suburbanites. Across the board, American cities popped up on the international stage.
When it comes to the hottest primary market homes, San Diego ranked second in the world, Orange County ranked third and Washington, D.C. ranked fourth.
Sante Fe topped the list for second-home markets, followed by Sarasota, Florida in third and Sun Valley, Idaho in fourth. Christie’s notes that with Sante Fe, the market lagged after the 2008 recession and has bounced back in a big way. That’s likely because of the city’s excellent quality of life, low-density detaches homes with large acreage, and relative affordability driving inventory shortages for new buyers.
In metropolitan areas (mid- and small-size cities), Orlando and Portland topped the list – the average luxury home in this category is $1.1 million. In suburban areas, Greenwich and New Cannan, Connecticut, Orange County, California, North Central New Jersey, and Washington, D.C. rounded out the top five. Suburban luxury homes command $1.8 million.
For the overall luxury housing market, New York ranked second, San Francisco ranked fifth and Los Angeles ranked sixth. (For perspective, Hong Kong ranked first, London ranked third and Singapore ranked fourth – these American markets are in with notoriously pricy international markets.)
You may have noticed a trend in which most of the listings skew towards the West Coast – the report notes that Chinese investors are also inflating the cost of luxury homes as they plant their money in bricks and mortar in cities like Vancouver, San Francisco, and Los Angeles.
These luxury homes are also prime real estate because they’re often in gated communities, next to great transport links, and surrounded by all the amenities you can think of – from peace and privacy to top-notch grocery stores, cafes and restaurants to high-end shopping and other services.
Luxury homes sales data also pointed to Colorado ski towns, Eagle County and Summit County, where home prices are steadily increasing. By January 2019, luxury home prices had boomed to $2.7 million.
For its list of top 10 most expensive luxury markets by county, another pattern emerges: Eight of the 10 counties are in California, starting with San Mateo with luxury home prices coming in at about $3.58 million, followed by Marin, San Franciso, Santa Clara, Santa Barbara, Los Angeles, and Monterey.
Other counties with burgeoning luxury markets include:
- Monroe, Florida
- Travis, Texas
- Multnomah, Oregon
- Cape May, New Jersey
- Alexandria City, Virginia
The View from Here
Whether it’s a penthouse overlooking Central Park in New York City, or a beachfront home in Malibu, homes that command luxury prices all come with the same gloating rights: a stunning view.
The greatest indicator of if a home might have a luxury price tag was the presence of breath-taking views, whether it was a snapshot of a sparkling city skyline lit up every night or a painting-like sunset overlooking the mountains each evening.
In New York, luxury views are of Central Park, the Manhattan skyline and the Hudson River. It’s no wonder most listings over $5 million are penthouse suites. However cliché, penthouses are mentioned in nearly 30% of all these listings.
“Views” are mentioned in nearly 88% of super-luxury listings, while other terms like “waterfront,” “beachfront” and “oceanfront” are ubiquitous, showing up 60 times more than listings for the conventional home.
Check Out Those Amenities
Turns out, the affluent really do play tennis and host garden parties! Research on luxury listings shows that pools and tennis courts appear 5.4% and 8.4% more than on listings for conventional homes. Pools are almost a no-brainer – they appear on 65.4% of luxury listings.
Hosting family and friends, from afternoon pool parties to dinner soirees, is to be expected too. “Entertaining” shows up on 24.5% of listings in Long Island and 29.5% of listings in Los Angeles.
Don’t forget other key amenities for throwing a blowout party, including a backyard terrace, guest suites, screening rooms for movie nights, and fully equipped recreational rooms.
There are some bragging rights in owning a home carefully planned by celebrity homebuilders or “starchitects.” There is name-dropping involved in luxury listings with well-known architects and designers being called out 44.7 times more in luxury listings.
Their wisdom can make for a stylish home layout – think of grand foyers, open concept kitchens that accommodate cooking and hosting, and well-groomed outdoor grounds.
Inside, luxury homes are peppered with high-end finishes from marble countertops, state-of-the-art kitchen appliances to customized walk-in closets arranged to suit the owners’ wardrobe needs.
Don’t forget the technology that’s now available for homes. Remote settings control everything from lighting, curtains, music, air control, and temperature have become a standard in luxury homes. There’s an emphasis on security too so homeowners can sleep easy at night in their sprawling grounds. Rich or poor, every homeowner knows comfort is key.
And then there are the hotel-like amenities such as concierge services, doormen, parking services and even features like a fitness center and spa. You’re paying big bucks so you should have all the perks in life that can make your life more convenient.
Finally, bespoke touches are what sets luxury homes apart from their cookie-cutter counterparts. Luxury listings featured custom features more than three times more than average listings.
Think big here. We’re talking about homes with wine cellars for the vino aficionados (some listings even have a corresponding app cataloging the wine selection in the cellar’s inventory), home theatres for the movie buffs, bowling alleys, golf greens (and even full courses), elaborate lobby-like foyers and custom-made in-house bars and lounges. The possibilities are endless when you’re working with a budget of $5 million or more.