It’s a good time for all things luxury right now. So let’s talk about it. What is luxury? The sometimes elusive, evolving, buzzy, catchall, overused word. By dictionary, luxury is “a state of great comfort and extravagant living.” The problem with this definition is that comfort and extravagance are almost entirely subjective. It can mean totally different things to different people. Coco Chanel once said: “Some people think luxury is the opposite of poverty. It is not. It is the opposite of vulgarity.” As glib and pretentious as that sounds, Chanel was born into poverty in the French countryside and raised in an orphanage by nuns, so there’s some credibility there. She wasn’t born with a silver spoon.
Today, Chanel’s name and brand is eponymous with luxury. It represents the very definition of high end fashion: top quality, exclusive, and high priced. But even in the world of fashion today, the lines have become a bit blurry in terms of what is considered luxury and what is not. It’s not just as simple as Birkin bags and Rolexes anymore. Luxury is a Louis Vuitton/Supreme hoodie or a pair of Balenciaga running shoes. It’s couture and streetwear under one roof. Social media has leveled the playing field in a lot of ways with no-name influencers becoming brand ambassadors for the big fashion houses. It’s not necessarily about who you know anymore as much as how many you know.
Generational value shifts have also influenced what we think of as luxury. For millennials, experience and sustainability are often more important than the product. They would rather have fewer, higher quality, long lasting items and prioritize the experience of purchasing them. Think about how the pandemic has also played a part in changing consumer preferences and how we define luxury. With hybrid remote work, renewed longing for space and community, and an emphasis on wellness, in many ways, luxury has surpassed people, places and things to become a state of mind. To live a life of comfort and extravagance in 2022 does not necessitate a heated driveway or a five-piece white Statuario Carrera bath. Luxury is time, comfort, freedom, expression, and education.
So what does it mean to be a luxury real estate agent? Is it a title, a moniker, a list of 8-figures sold and closed? Is it local knowledge in high-priced zip codes? Is it a lifestyle? Is it about quality of service?
In the world of real estate, we define “luxury” as the top 10% of any given market, which of course varies wildly from Boston to Beverly Hills. Unless you have been living under a rock, you know that this market is on fire right now, across the country. 2021 saw a 15% increase in sales in the luxury market, year over year, according to the report “2022 Global Luxury Market Insights” (produced by Coldwell Banker). This growth was largely due to people making more money. Cryptocurrency, stock market gains, rising home equity and increased savings all contributed to 17% annual growth rate of individuals with a net worth of $5 million plus.
Globally, the number of ultra high net worth individuals (net worth of $30 million plus) jumped 9.3%, according to Knight Frank’s “2022 Wealth Report.” The U.S. took the lead last year in contributing to that pool of uber-wealthy and, as evidenced by the data, they are all buying real estate. They are not just buying in primary cities like New York, L.A., and Miami; they are buying in secondary cities like San Diego and Austin, and in resort markets like Aspen and The Hamptons. We have seen it first hand here in New York City in the last 18 months and 2022 is proving to be no less exuberant. In the first quarter of this year, NYC saw luxury sales jump 44% YoY, according to “Elliman’s Q1 Market Report” with an increase in average sales price of 24%. It’s not surprising given how high Wall Street bonuses were this year, on top of crypto and stock market gains.
Money, money, money, money…MONEY. There’s a lot of it in NYC right now. I’m talking about cold, hard, cash. So much so that 47.7% of the market share in Q1 were cash buyers, according to Jonathan Miller of Miller Samuel. That’s almost half the buyer pool! Given the recent rise in mortgage rates, this gives the NYC market boom extra resilience and staying power right now. But low inventory also means increased bidding wars, which is happening more frequently in the luxury market. Case in point, last month Barron’s highlighted a “$17 million waterfront property in Sag Harbor” went into a bidding war after 100 days on the market as a way to illustrate the “fierce luxury market.”
So what does it mean to be a luxury real estate agent? Is it a title, a moniker, a list of 8-figures sold and closed? Is it local knowledge in high-priced zip codes? Is it a lifestyle? Is it about quality of service? Perhaps it has evolved beyond brick and mortar. Perhaps the new luxury real estate agent today is also a state of mind. It’s not simply about price, it’s an attitude and a sensibility. It’s about insider knowledge and dedicated discretion. If luxury is the sophistication of choice and the power of self expression, then the new luxury real estate agent is a guide to helping people live their best lives in whatever form of shelter that may take. Coco herself would approve. Chanel built one of the greatest luxury brands in the world, ultimately, on freedom—the freedom for women to move in their clothing. She constantly mixed the high and the low and wasn’t afraid to defy convention. Ahead of her time, Chanel’s secret to luxury was straight up authenticity. You can’t put on a price on that.
Until next week,
