What No One Tells You About Buying Luxury Real Estate

Luxury real estate is a fiercely competitive and richly rewarding market. To first-time or inexperienced buyers, luxury real estate can seem unapproachable. After all, most homeowners focus on finding a home that’s available on a budget. However, the truth is that buying luxury real estate is no more difficult than purchasing any other home for those willing to make the investment. Once you do, you might find that purchasing luxury real estate makes more sense than you first expected.

There is no one-size-fits-all definition for luxury homes. You will probably know a luxury home when you see it, but there isn’t a minimum size or set of features that characterize all luxury homes. In a large metropolitan area, a luxury condo could be relatively small. In a rural area, a luxury home could be incredibly large. Thus, it is primarily the home’s unique attributes that distinguish luxury real estate from ordinary homes. Specifics may vary, but regardless of what particular mix of features a home may have, luxury homes will have the high-end version of these features.

Luxury homes will also typically have a wider variety of amenities than other homes do. At different times, different features may be more in-demand than others. For instance, the rise of the work-from-home trend has fostered the popularity of home offices. In a luxury home, this concept of doing more at home can be expanded to include features such as a home gym, pool, or sauna. Some features will have evergreen appeal, even if back-to-the-office becomes the norm.

Luxury homes tend to list for over $1 million, and some go well into the eight-digit price range. However, a house does not need to be exorbitantly priced to be considered a luxury home. In fact, some luxury homes sell for well under the million-dollar range, especially when you consider condos, which tend to offer luxury in a compact, affordable, and convenient format. Another factor in the price will be lot size and yard size. A luxury home with a small yard could be built on a smaller lot, and it would likely cost less than a luxury home with a more spacious yard. Different factors can solidify a property’s status as luxury real estate.

Remember that luxury carries a premium, meaning that luxury homes will generally have a higher price per square foot than regular homes. In some cases, a home may even be associated with a luxury brand name, like branded condominiums. It’s up to you to decide if a particular home seems worth it. From a financial perspective, homeowners typically recover the premium they paid for a luxury home, if not more, when selling. When looking into luxury homes, you can work with your Realtor® to determine if the price looks appropriate.

You may assume it’s a good time to get into a luxury home when the real estate market is down and prices are low. On the other hand, you might want to enter the market when costs are rising and homeowners are seeing quick capital appreciation. Whatever your financial strategy for real estate, you should know that luxury home prices don’t necessarily correlate with other financial assets or even other homes. This is because of differences in market dynamics. According to the National Association of Realtors (NAR), luxury homes are more likely to be purchased with cash than other homes are, in addition to other differences in the market.

Luxury homes tend to be built with intentionality, even if they are sometimes decadent. Some luxury homes are even custom-built. In many places, luxury housing is somewhat unique to the local geography, climate, and culture. For example, warmer areas are more likely to feature outdoor pools or outdoor kitchens. Luxury homes also vary by region because of the differences in the cost and availability of space. Thus, Rancho Santa Fe luxury homes are very different from luxury properties in New York.

While luxury homes may sometimes be purchased for cash, you can still get financing for a luxury home, and the process is not much different than it would be for any other home. Ideally, it’s good to shop a little below budget when you are financing a real estate purchase, just so that you have funds available should there be a competing offer. As with any real estate purchase, your best move is to get pre-approved for a mortgage to know what your budget will look like with financing. 

You may be ready to buy your first luxury home, or you may be ready to renovate your existing home with more luxury features. Home remodeling can have great returns later on if you approach it strategically. Also, you could purchase a luxury home and undertake remodeling projects to see a return on investment when you sell the home later.

If you have additional questions about luxury real estate, you connect with a luxury real estate professional today. Laurie McClain is an experienced Realtor® specializing in Rancho Santa Fe luxury homes. Her portfolio includes a wide range of high-end homes throughout the area. Laurie McClain can show you the best of the local market and help you hone in on the most appealing luxury features. When you’re ready to see what Rancho Santa Fe real estate can offer, reach out to Laurie McClain to get started!