California is dominating the U.S. luxury market.
While Manhattan still ranks No. 1 when it comes to luxury real estate prices, seven of the top 10 counties were in California, according to Realtor.com’s Luxury Homes Index released Tuesday (News Corp., which owns Mansion Global, also owns Realtor.com).
Four San Francisco Bay areas overcame drier IPO activity to make the top 10. Coming in second, after Manhattan, was San Mateo ($2.384 million), followed by San Francisco ($2.383 million) and Marin ($2.154 million), while Santa Clara ($1.83 million) was in sixth place.
Prices in San Mateo and San Francisco have risen by 9% and 6.8% respectively compared with the first six months of last year. In Marin, meanwhile, they were down 7.1%, while they were flat in Santa Clara. According to a Bay Area broker, it is the $3 million-to-$5 million price bracket that’s driving the market, as the ultra-luxury sector slows.
“In the Bay area, $20 million houses will sit there for longer. That market is softening a bit as buyers are nervous about the economy and the election, but the $3 million market is still very active,” Justin Fichelson of Climb Real Estate, and star of Bravo’s “Million Dollar Listing San Francisco”, told Mansion Global.
“San Mateo in Silicon Valley is very expensive and encompasses Hillsborough, while Marin is north across the Golden Gate bridge. They are both wealthy areas with beautiful views and have very active $3 million- to-$5 million markets. Around $3 million won’t buy you a huge house in these areas, but you can certainly pick up a cute little house.”
Los Angeles was also in the top 10 with an average luxury price of $1.337 million, up 3.3% year-over-year and 20.8% on 2013. It has fared better than other markets, although a recent report showed some cracks—albeit small—are now starting to appear in a market that has gone from strength to strength in recent years.
SEVEN OF THE TOP 10 COUNTIES WERE IN CALIFORNIA
Manhattan, meanwhile, ranked No. 1 despite reports of a real estate cooling in the borough.
According to Realtor.com’s data, the average price of a high-end property, defined as the top 10% of sales, in Manhattan was $3.85 million in the first six months of 2016. That’s almost a quarter higher than a year earlier and a 40% jump compared to 2013.
This spike has been driven by sales that had been in contract in the last 12 to 18 months in some of Manhattan’s most expensive new developments, such as 432 Park Ave., the tallest residential building in the western hemisphere at 1,396 feet. These pending sales closed in the second quarter, driving prices higher.
However, more recently, there’s been anecdotal evidence of a slowdown in the luxury condo market, fueled by oversupply and waning demand from nervous investors amid global economic uncertainty and the U.S. presidential election.
In addition to Manhattan, Brooklyn and Boston and its surrounding towns were the only areas not in California to make the top 10. Average luxury prices in Brooklyn were $1.439 million, up 6.2% on the year and almost a third higher than in 2013.
Over the past decade, many Manhattanites have flocked to Brooklyn in search of more space for less money, with luxury developers not long behind them. This, however, has pushed up prices across large parts Brooklyn.
In Boston and its surrounding towns which make up Suffolk County, meanwhile, the average price of a luxury home was $1.158 million in the first half of 2016, up 10.3% from a year earlier and 24% compared with 2013.
It is undergoing its biggest residential boom since the 1920s as recent years have seen more international wealth come to Boston, with large employers, the area’s colleges and even medical centers all playing a role.
Leading the pack is the Four Seasons Private Residences One Dalton Street, atop Boston’s second Four Seasons hotel in the city’s posh Back Bay neighborhood. When completed in the summer of 2018, One Dalton will be New England’s tallest and most expensive residential building.
“Boston is a hub of world-class institutions for higher education, healthcare, technology, and culture, and recently has become a destination of more and more non-stop international flights. Combining all that Boston has to offer with the national trend toward city living, it’s no wonder that buyers are flocking to our new buildings,” Dick Friedman, president and chief executive of Carpenter Company, One Dalton Street’s developer, said.
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