Tag Archives: Luxury Housing

World’s Wealthy Packing Up And Moving As Tensions And Taxes Take Toll

Rich people are picking up sticks and getting out of dodge, according to Johannesburg-based research firm New World Wealth, which notes that around 108,000 millionaires migrated across borders in 2018 – a 14% increase over 2017 and more than double the level in 2013. 

The top destinations? Australia, the United States and Canada, reports Bloomberg. Around 3,000 of the millionaires left the UK last year – with Brexit and taxes cited as possible motivations.

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Present conditions such as crime, lack of business opportunities or religious tensions are key factors, according to the report – which can also serve as key future indicators according to Andrew Amoils, New World Wealth’s head of research. 

“It can be a sign of bad things to come as high-net-worth individuals are often the first people to leave — they have the means to leave unlike middle-class citizens,” says Amoils. 

Top destinations

According to New World’s report, Australia tops most “wish lists” for immigrants due to its perceived safety (deadly bugs and animals aside, we assume). There is also no inheritance tax down under, and the country has strong business ties to Japan, China and South Korea. Moreover, Australia “also stands out for its sustained growth, having escaped the financial crisis largely unscathed and avoided recessions for the past 27 years,” according to Bloomberg

The second most popular country was the United States – and in particular the cities of Los Angeles, New York, Miami and the San Francisco Bay as preferred options. 

Fleeing China and India

Due to China’s strict regulations on capital outflows in recent years, many of the country’s wealthy are subject to hefty taxes. In response, assets are shifting as rich Asians move to more developed countries.

The outflow of high-net worth individuals from China and India isn’t particularly concerning from an economic standpoint as far more new millionaires are being created there than are leaving, New World Wealth said.

“Once the standard of living in these countries improves, we expect several wealthy people to move back,” Amoils said. –Bloomberg

Turkey, meanwhile, lost 4,000 millionaires last year – the third straight year of losses, while around 7,000 Russian millionaires have left the country amid crippling sanctions related to the annexation of Crimea. 

Source: ZeroHedge

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McMansions Are Back And They’re Bigger Than Ever

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There was a small ray of hope just after the Lehman collapse that one of the most lamentable characteristics of US society – the relentless urge to build massive McMansions (funding questions aside) – was fading. Alas, as the Census Bureau confirmed this week, that normalization in the innate American desire for bigger, bigger, bigger not only did not go away but is now back with a bang.

According to just released data, both the median and average size of a new single-family home built in 2015 hit new all time highs of 2,467 and 2,687 square feet, respectively.

And while it is known that in absolute number terms the total number of new home sales is still a fraction of what it was before the crisis, the one strata of new home sales which appears to not only not have been impacted but is openly flourishing once more, are the same McMansions which cater to the New Normal uber wealthy (which incidentally are the same as the Old Normal uber wealthy, only wealthier) and which for many symbolize America’s unbridled greed for mega housing no matter the cost.

Not surprisingly, as size has increased so has price: as we reported recently, the median price for sold new single-family homes just hit record a high of $321,100.

The data broken down by region reveals something unexpected: after nearly two decades of supremacy for the Northeast in having the largest new homes, for the past couple of years the region where the largest homes are built is the South.

While historically in the past the need for bigger housing could be explained away with the increase in the size of the US household, this is no longer the case, and as we showed last week, household formation in the US has cratered. In fact, for the first time In 130 years, more young adults live with parents than with partners

…so the only logical explanation for this latest push to build ever bigger houses is a simple one: size matters.

Furthermore it turns out it is not only size that matters but amenities. As the chart below shows, virtually all newly-built houses have A/Cs, increasingly more have 3 or more car garages, 3 or more bathrooms, and for the first time, there were more 4-bedroom than 3-bedroom new houses built.

In conclusion it is clear that the desire for McMansions has not gone away, at least not among those who can afford them. For everyone else who can’t afford a mega home or any home for that matter: good luck renting Blackstone’s McApartment, whose price incidentally has soared by 8% in the past year.

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For those curious for more, here is a snapshot of the typical characteristics of all 2015 new housing courtesy of the Census Bureau:

Of the 648,000 single-family homes completed in 2015:

  • 600,000 had air-conditioning.
  • 66,000 had two bedrooms or less and 282,000 had four bedrooms or more.
  • 25,000 had one and one-half bathrooms or less, whereas 246,000 homes had three or more bathrooms.
  • 122,000 had fiber cement as the principal exterior wall material.
  • 183,000 had a patio and a porch and 14,000 had a patio and a deck.
  • 137,000 had an open foyer.

The median size of a completed single-family house was 2,467 square feet.

Of the 320,000 multifamily units completed in 2015:

  • 3,000 were age-restricted.
  • 146,000 were in buildings with 50 units or more.
  • 148,000 had two or more bathrooms.
  • 35,000 had three or more bedrooms.

The median size of multifamily units built for rent was 1,057 square feet, while the median of those built for sale was 1,408 square feet.

* * *

Of the 14,000 multifamily buildings completed in 2015:

  • 7,000 had one or two floors.
  • 12,000 were constructed using wood framing.
  • 6,000 had a heat pump for the heating system.

* * *

Of the 501,000 single-family homes sold in 2015:

  • 453,000 were detached homes, 49,000 were attached homes.
  • 327,000 had a 2-car garage and 131,000 had a garage for 3 cars or more.
  • 200,000 had one story, 278,000 had two stories, and 24,000 had three stories or more.
  • 348,000 were paid for using conventional financing and 42,000 were VA-guaranteed.

The median sales price of new single-family homes sold was $296,400 in 2015, compared with the average sales price of $360,600.

The median size of a new single-family home sold was 2,520 square feet.

The type of foundation was a full or partial basement for 80% percent of the new single-family homes sold in the Midwest compared with 8% in the South.

109,000 contractor-built single-family homes were started in 2015.

source: ZeroHedge

A Luxury Tear Down In LA’s Bird Streets

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A luxury tear-down in the Bird Streets. 9212 Nightingale Drive, priced at $13.8 million, the 5,000-square-foot house on more than half an acre is being marketed as the site for a 12,000-square-foot home that developers hope would garner as much as $70 million.

By Neal J. Leitereg in The Los Angeles Times

The actual house didn’t factor much into the equation when Dr. Dre parted with his Hollywood Hills West home in January for $32 million.

The contemporary-style residence behind gates on Oriole Way was not purchased for its 9,696 square feet of space, but rather for its land value and potential to build an astonishing $100-million-plus estate on what has been called the best view lot in Los Angeles.

Such is life in the so-called Bird Streets, an enclave that has long been popular among celebrity and mogul types, where a developers flush with cash look to double down on a surging luxury market.

At 9212 Nightingale Drive, a home taken down to the studs and built new last year is now being shopped as a tear-down, according to listing agent Benjamin Bacal of Rodeo Realty Beverly Hills. That’s how popular and sought-after the area has become.

Priced at $13.8 million, the 5,000-square-foot house on more than half an acre is being marketed as the site for a 12,000-square-foot home that developers hope would garner as much as $70 million.

If that sounds like a pie-in-the-sky figure, Bacal points to two other homes on the same street where $70 million seems to be the magic number.

Three doors down, Global Radio founder and president Ashley Tabor has invested more than $30 million into a two-house compound he bought from Megan Ellison, the film producer and daughter of billionaire Larry Ellison, in 2013 for $26.25 million.

In similar fashion, billionaire Ted Waitt, who co-founded Gateway Inc., has put about $30 million toward his home on Nightingale. Also purchased from Ellison in 2013, the corner-lot property cost $20.5 million.

Each could end up worth $70 million, as long as the tear-down market stays red hot.