Happy Valentine’s Day! Every year this day is put aside for the lovers of the world and the greeting card companies. But this year, deep-pocket lovers have even more to be in love with, since luxury real estate has a new benchmark of an outrageous $100 million.
Granted, this number isn’t for everyone. In fact, only 5% of the overall housing market is defined as luxury, but we can all dream, can’t we? Based on how quickly Anna Maria properties have increased in value over the past three years, why shouldn’t $100 million be the new norm for a narrow percentage of the population?
According to The Wall Street Journal, since 2020, at least 24 homes nationwide have traded for $100 million and up. Florida has had a dramatic increase in nine-figure transactions in recent years. Since 2020, three homes over $100 million have changed hands in New York City compared with six in and around Palm Beach. Tampa is also benefiting from the ultrarich due to the lack of available luxury properties in the Miami area. Tampa’s sales have been boosted by 35.8% in the luxury market during the third quarter of 2023 compared with the same period last year, bringing in buyers who were disappointed with the availability of high-end homes on the east coast of Florida.
In 2023, there was a record set for a sale in Florida of $170 million. A broker selling high-end properties in Palm Beach said there are more billionaires than there are oceanfront estates to sell them. Don’t get too comfortable with the $100 million benchmark, $200 million is waiting in the wings as the number of billionaires around the world grows. There were 3,194 billionaires in 2023, up from 2,170 in 2013, according to the wealth research firm Wealth X.
The ultra-rich aren’t much different from any buyer. Not comfortable with the higher interest rates, especially for jumbo loans, they’re using cash to buy their estates. These cash buyers are propping up the overall real estate market, shifting from a downturn in late 2021. According to Redfin, the median luxury sale price during the third quarter of 2023 rose 9% year-over-year to $1.1 million, almost three times the annual jump for nonluxury homes, which rose only 3.3% during the same period. The median price is the mid-point of sale prices; half of the sales are above and half are below.
Redfin also reports that 42.5% of luxury buyers paid cash during the third quarter of 2023 compared to 34.6% during the same period the previous year. In the third quarter of 2023, only 28% of nonluxury homes sold for cash. In addition, inventory of luxury homes rose 2.9% during the third quarter of 2023 compared to a decline of 20.8% for nonluxury homes nationwide.
If there’s a lesson to be learned here, it’s that wealthy people watch their money the same as the rest of us and use cash if the numbers make sense. It also means that it’s far better to be rich and have the option of an all-cash offer on a property.
Be careful, the ultrarich will be coming for your home when the inventory of appropriate billionaire estates runs out, and Anna Maria Island is prime for their next stop. Nevertheless, the Gulf of Mexico that we all love is the same whether your home is a cottage for $1 million or a sprawling estate for $100 million. Luxury is in the eye of the beholder.
