If you’re like us, you’re self isolating this week as much as possible. And if you’re especially like us, you’ve been using some of your time to catch up on your favorite luxury home television shows. From “Million Dollar House Hunters” to “Mega Mansions” and “Extreme Homes,” nearly everyone is fascinated by celebrity homes and the dream of owning a fully customized luxury home of one’s own.
So, what’s the difference between a local luxury home like you would find on beverly-hanks.com and the ultra luxe trophy homes you see on TV? As it turns out, you can probably guess a lot of the features that set them apart. But there is a lot of nuance in luxury real estate, as well.
Here are the real differences between luxury and ultra luxury homes.
What is an Ultra Luxury Home?
As we’ll see below, the definition for entry level “luxury real estate” varies considerably by location. Worldwide, the average starting price of a luxury home varies from under $1 million in Ottawa, Canada, to above $10 million in Monaco. But the upper limit for homes ostensibly has no bounds! The highest sales price for a home in 2017 (and highest to that date) was $360 million for a residential property in Hong Kong’s exclusive Peak neighborhood.
So, what makes a luxury home an ultra luxury home? Also called trophy homes, ultra luxury homes are top tier in both price and quality. Ultra luxury homes sit at the pinnacle of quality design, build, and finishes; lavish amenities that promote wellness, and “wow” factors. Many globally exceed the “billionaire’s benchmark” of $100 million.
What’s the Difference between Luxury and Ultra Luxury Real Estate?
A home is a home, right? So, why do some homes cost tens of millions of dollars, while others do not?
The answer in part may seem cliche coming from a real estate site, but it’s because of Location, Location, Location. It’s true. The difference between a $1 million and $10 million home is typically because of its location—homes that have more land, are in a more exclusive location, offer spectacular views, or afford more privacy and discretion. That’s why a luxury home in Manhattan, New York sells for magnitudes of order more than luxury homes of the same size in Manhattan, Kansas.
The other major difference between luxury and ultra luxury homes are in their square footage, finishes, and amenities. A $1 million dollar house quickly becomes a $3 million house because of its custom design work. For instance, at 573 Elk Mountain Scenic Highway in Asheville, the original owners who built that house hired artisans from around Asheville to create the fence, iron railings, wet bar, wine cellar, wall coverings, and more around the house. Along with fine furnishings, these hand-created finishes raise the perceived value of the home.
The same is true for the ultra luxury homes we love to admire in other markets. They move from offering leisure living to featuring extreme amenities. Drake’s 34-meter wide driveway. Michael Jordan’s regulation-sized basketball gymnasium. The 12,000-bottle wine cellar of the Chartwell Estate (Jed Clampett’s home). At an average of 26,227 square feet and with a total of 41 bathrooms, these three properties alone demonstrate the value of sheer square footage, architectural merit, bespoke and extreme features, and a prioritized location to shape a property’s value.
Why are There Such Large Price Drops for Ultra Luxury Homes?
Everyone wants a custom home. You may believe the term is overused with luxury real estate. But fortunately or unfortunately, that’s what it’s all about.
Building a home—any home—to your unique needs and specifications is a dream come true. However, just because you want a putting green in the middle of your infinity pool (Michael Jordan again), doesn’t mean your buyer will want the same thing. We’ve covered before that some home renovations add value to your home and some do not. Many ultra luxury homeowners have dropped millions of dollars into rehabbing their home and adding custom bespoke finishes—and that’s above the cost of the home itself!
These extravagant updates often reflect in the listing price of the ultra luxury home, but they rarely translate into the sale price of the home. That difference is the deep price drops that you read about—It’s not unusual to see a drop of 20%, and we’ve seen price reductions as much as 73% in some markets around the country! It’s also why even high-end homeowners need to consult with their agent on the best finishes to invest in before they rehab their home. The market will only bear so much extravagance, and making smart choices overall will get you a better return when it’s time to sell.
How does WNC’s Luxury Real Estate Market Shape up?
The luxury real estate market in Western North Carolina looks very different than that in Hong Kong or Miami. For most of our purposes, we consider the luxury market to begin at $750,000 in all our counties except Buncombe, where luxury real estate begins at $1 million. So, with those criteria in place, do we have a large luxury market?
Right now, there are nearly 3,000 active residential listings under $750,000 in Beverly-Hanks’ nine-county service range. By comparison, there are 594 active luxury listings. That means, one out of every 6 homes for sale today is considered a luxury home.
If you subscribe to our Beverly-Hanks Quarterly Market Reports, you know that our region has seen a record sales pace in recent years. As you could guess, lower priced homes sell much more quickly on average than luxury homes. In fact, our region’s average active days on market was 215 for 2019, compared to 317 for homes priced over $1 million. That means that while one out of six homes for sale is in the luxury range, that figure does not directly translate to the number of homes in total across our region.
There is also a lot of variation within our luxury market. Nearly half of the luxury homes listed (252 of 594) are priced between $750,000–$1,000,000. In contrast, only 45 are priced above $2,500,000, and only 3 are more than $5 million. Sales of homes priced $1,000,000–$1,600,000 have grown noticeably since 2015, while sales for homes priced above $1,600,000 have barely grown at all. There are also notable differences in luxury real estate from county to county (Buncombe shows the largest number of sales by far) and from neighborhood to neighborhood.
All this is to say that while “luxury real estate” is a fun term to examine, it varies considerably by country, metro, county, city, and neighborhood. When you are selling your luxury home, you need to have a REALTORⓇ at your side who is an expert in the nuances of the luxury real estate market near you.
Secure the Best Partner to Sell Your Luxury Home
In 2019, Beverly-Hanks agents completed 174 luxury real estate transactions over $750,000 in Western North Carolina. Our nearest competitor represented a total of 43 transactions.
To maintain such a winning record in real estate sales, consistency matters. Beverly-Hanks is the reliable leader in Western North Carolina, with 13 offices spanning the region. Having one of the largest and most experienced marketing teams behind every listing allows Beverly-Hanks to design, execute, and deliver customized marketing plans for each of our luxury properties. We pride ourselves in gathering the necessary market analyses required to effectively sell each luxury property. This enables our clients to relax more during the selling process and know everything will be handled with the finest care and attention. The name Beverly-Hanks sets the bar for luxury home sale success.