October is Luxury Month at Inman. All month, we’ll be talking to top producers from across the country, offering advice on how to join their ranks, and more. That all leads up to the live presentation of the Inman Golden I Club honorees for this year.
What does the word “luxury” entail — and what does it it even mean to be a luxury agent in The Year Of Our Lord 2021?
Is it all about the price range of the home an agent sells or simply a state of mind? Is it the caliber of her client or the delicate Italian cut of her buyer’s suit?
As far back as 2015 — 100 years removed from the Trump presidency and COVID — Christie’s International Real Estate issued a white paper in which brokerages in nearly 100 housing markets were surveyed on what, exactly, constitutes a luxury home. The consensus, published in the paper, “Luxury Defined,” suggested that the average starting price of a luxury home across all housing markets worldwide was $2 million, ranging from $750,000 on the low end in Durban, South Africa, to $8 million in Beverly Hills.
By 2017, Christie’s average starting price for a luxury home rose to $2.4 million and earlier this year the median sales price for a single-family home clocked in at a whopping $1.7 million, a 22-percent uptick from 2020, according to a separate study by The Institute for Luxury Home Marketing.
As home values soar to unprecedented heights, the old parameters distinguishing luxury homes — and, subsequently, luxury agents — are rapidly shifting, agents told Inman. After all, what does a $1 million price tag even mean today — cue Dr. Evil — when a typical home in San Jose, California, easily fetches $1.3 million and draws $1.08 million in Bethesda, Maryland?
Luxury agents who spoke to Inman throughout October offered up a variety of definitions for the word “luxury” and raised entirely new questions about what it means in the wake of a life-threatening virus, economic uncertainty and a growing wealth gap unlikely to narrow anytime soon.
“I think the word has become bastardized in our industry,” Andrea Geller, a Berkshire Hathaway Services broker in Chicago, told Inman. “In the real estate industry, it’s high-end homes, and the value assigned to a ‘luxury home’ will vary from market to market. Agents are now equating service to luxury. Service should not be graded on a luxury level. Products are. Great service is defined by words like exceptional.”
Some, like broker Kevin Weil, believe that sticking to the “top 10 percent in an area based on values” as the “entry level for luxury” can help avoid the term becoming diluted to the point of being meaningless but it may already be too late since, as Michael J. Franco of Compass in New York told Inman, the pandemic has turned it into something akin to ‘home’ — a word that, in real estate, is frequently used not to refer to an individual property but to evoke an aura of a place where one feels comfortable and wants to come back.
“The definition of luxury has shifted since the pandemic,” Franco said. “Luxury in many ways no longer defined by price and more about the creature comforts of ‘home’ including outdoor space, comfortable work-from-home spaces, and expansive kitchens.”
That definition of luxury is what marketing experts sometimes refer to as “aspirational marketing.” It’s not necessarily the sports car in the garage or a bottle of Veuve Cliquot in the kitchen but rather an atmosphere a notch above what a potential buyer currently calls home. For some, that might mean a spare room for the kids to study while for others, it might be a swimming pool or views of the mountains.
“Luxury is a such a personal thing – what one person considers ‘luxurious,’ another might consider ‘compulsory’ or ‘basic’ or even ‘unnecessary,'” agent Steven Gottlieb of Warburg Realty told Inman, adding that the extended COVID-19 outbreak has made people understand more clearly what they want from the homes in which they’ve spent so much time. “I’m not sure that the pandemic has redefined the word ‘luxury,’ but I do think that people’s priorities have changed, as they’ve spent more time at home than ever before.”
Knowing — and, in an ultra-competitive market — being able to help clients meet those desires can become a new definition of luxury untethered to a specific price range.
“Luxury is anything that in the act of consuming it is intended to transform your experience of life in that moment,” Nir Betan, chief strategy officer at Toronto-based STUDEO, said in the Inman Coast to Coast Facebook group. “It is not purely a physical and material thing – it has a spiritual component to it. This is especially true of luxury homes which are really like works of art that you live inside of and that in itself can become hugely transformative.”
But as home prices continue to soar, conversations like these can become increasingly meaningless for a larger portion of the population now feeling priced out of the housing market altogether.
“My [two] cents is that housing is more of a luxury than ever,” Boardman Realty broker Teresa Fisher Boardman told the Inman Coast to Coast Facebook group.