While most Americans are not buying much due to the economy, in terms of wealth, what are the top 9% buying? The Luxury Institute recently reported that 24% of those wealthy consumers have purchased residential real estate since 2008. Early 2008 through early 2011, 38% of that group purchased at least one second home. Of those, nearly half took advantage of the lower prices to purchase a second home more than 500 miles away from the primary residence.
What got me digging into these records were recent news reports that Mercedes Benz unit sales in the United States recently broke a record; an Italian handbag retailer experienced difficulty keeping its $1,000+ handbags on the shelves; and the top two luxury purchase types by wealthy consumers were either a $1,000+ case of wine or piece of jewelry.
In the Luxury Institute survey cited, the sample demographic was 50% male and 50 % female with a median age of 52, a $233,000 median income, and a $1.5M net worth. The large majority was married and more than half were empty nesters. Almost all possessed at least a Bachelor’s degree and were born in the US. More than half were employed full time and over 20% were self-employed or the company owner.
What was the value of the most recent real property purchase by these wealthy consumers? About 66% paid less than $500,000, while the mean price paid was $984,000. To recap, one quarter of the top 9% of Americans are buying real estate, and a significant number of those properties are second homes.
Regardless of price band, how are West Hawaii single family and condo sales doing? As you can see from the charts below, West Hawaii 2011 median sales prices are well below $500,000. The category with the least amount of price slippage is South Kohala single family homes. This area has Waikoloa Village and wet side Waimea, both affordable areas for local families. Significantly more families bought in 2011 vs 2010.
The category with the second least amount of sales price slippage is South Kohala condos. This is second home territory. South Kohala 2011 condo unit sales are significantly up, even more so than single family homes. Vacationers are not missing this opportunity to buy low.
January through September 2011 vs 2010
|2011||Unit Sales||Median Price|
|N Kona single family||312||$370,000|
|S Kohala single family||163||$330,000|
|N Kona condo||249||$172,000|
|S Kohala condo||199||$355,000|
|2010||Unit Sales||Median Price|
|N Kona single family||287||$410,000|
|S Kohala single family||127||$340,000|
|N Kona condo||237||$220,000|
|S Kohala condo||134||$377,500|