The Return of the Luxury Buyer in Sarasota’s Top-Performing Niche

This month I want to focus on what I am calling the return of the luxury buyer, or those purchasing property listed at $1m or more. In the video below, which we shot on the water, I explain why the high end of the market is on the move.

Historically, Sarasota’s stunning beaches, beautiful Gulf vistas, and fabulous lifestyle have made it a natural fit for those seeking a luxury waterfront property. And now, in our recovering economy, there is plenty of action in the top end of the Sarasota real estate market.

Sarasota Luxury Real Estate On the Up

I think there are three reasons I am seeing the luxury buyers return, and why this sector of the market is currently thriving.

• First, as I have maintained for months, the luxury market is where the best deals are. While inventory levels in this segment are shrinking, competition for buyers is still very strong. Months of Inventory have always been a leading indicator for the health of a market, and we are down to about one year of inventory for properties listed over $1m. Although, I still see fair amount of volatility in this number for the next couple of quarters.
• The second reason luxury property sales are up, is that credit is loosening and borrowing is cheap. The high-income buyer is having more success again borrowing $1m or more, at rates close to conforming mortgages (which are at record lows).
• The final reason the luxury buyer has returned, is that for many in this segment the economy is better. One major factor improving the buying power and financial outlook for this segment’s individuals is entrepreneurial profitability and shareholder value.

When consumers spend more it increases profitability, and increased profits lead to increased shareholder wealth. This new wealth leads to more spending power and that is now moving from equities to real estate.

Luxury Market Immunity to Economic Hard Times

Three quick scenarios which demonstrate how luxury markets outperform in times of economic uncertainty:

• Rolls Royce had its best year ever in 2011 in its 107 year history.
• Burberry a leading British fashion designer has gone from trading at £154 in December 2009 to £1500 in April 2012.
• Similarly Apple has gone from trading at $80 per share in January 2009 to $630 per share in April 2012.

For these reasons I am working with a lot more luxury buyers. They are back in our market and this is good for Sarasota Real Estate, good for business, and good for our community.
Are there any questions I can answer for you? Call me at 941.587.0740.