Today we share with you an article that senior vice president and managing officer of Intero, Alain Pinel wrote entitled, How Do You Define High-End? Here in the Silicon Valley we have some of the most expensive and exclusive luxury-high end Real Estate; but how is that decided? What makes that the case? Read on to find out.
“It would be convenient if there was only one answer to the question. Tough luck. There are many ways to define high-end. Depends on who you ask: what real estate agent or company? In what part of the country? In what country for that matter?
Price, of course, is the main criteria being looked at to make a determination as to whether a property is high-end or not. The price comparison can be deceptive though, and that’s where the challenge lies and the answers differ.
Take for example the most expensive home in a neighborhood or even in a town. Is it a high-end property? My guess is that the majority of the real estate brokers would say yes. I respect that point of view, but I beg to disagree. The fact that a house is very pricey relative to the local median price or that it is at the top of the price ladder in that particular market, does not necessarily make it an estate-quality property.
Luxury, as it pertains to real estate, is more a function of location than anything else, such as quality construction, size, comfort, etc. A house cannot be considered high-end if it is located in an area which is not regarded or perceived as high-end. It may be a terrific home but good looks are not the most important factor.
When we, at Intero, made the decision to create a high-end division and a relevant marketing program specific to the luxury market, we had to think hard about the above considerations to design a product that would truly fit the needs of those discriminating buyers and sellers who identify with the high-end. These are some of several guidelines we followed to build Prestigio, our global luxury marketing program.
Who is to judge what constitutes high-end?
Judges and juries (buyers & sellers) have changed over the last 20 years or so. During that time, thanks to technology, ease of transportation, economic development and free-flow communication, the world has become a lot smaller. Today, high-end real estate is no longer solely defined by local/regional values; it is defined by national and, even more so, international standards.
We may have been too busy looking at ourselves in the mirror to notice that real estate prices all around the world have skyrocketed in many emerging countries (where more & more of our buyers come from) while remaining extremely high in Europe. I guarantee that if you are house-shopping for a luxury property today in Moscow, or Beijing, or Mumbai… You are not going to like what you see below $1M. I am not even talking about prices in Paris, London, Milan, Geneva, etc.
Minimum price for the high-end?
Keeping in mind what we just said in the previous paragraph, we clearly understand that the minimum price to qualify for a high-end appellation, cannot just be the top 10% or whatever percentage of the price ladder in any given area. If such was the case, a house priced at $300,000 in an area where the median price is $200,000 would belong. It is not being a snob to suggest that it does not. Again, this house is perhaps the best one on the block but it is not a high-end home by the standards defined above.
In my opinion, $1M is the absolute minimum a house can be priced at, anywhere, to be seriously considered high-end. Of course, in many states/towns/neighborhoods, the thresholds can vary. So long that the minimum price is significantly above the median price, the bar can easily be set at $2M or $3M, or even higher in some communities.
Depending on the price, but also the location and the style, the relevant marketing program needs to be tweaked to best tailor the targeted audiences of buyers, in the US and abroad.
What is a high-end location?
As we said earlier, the location has to identify with the high-end before a house can share the same image and reputation. Most towns or districts, in any state, do not fit the standards we described. That’s perfectly all right. They perform very well anyway based on a bigger volume of supply & demand. The high-end stamp is obviously not a must to do well.
A high-end area location is always a “destination” for the wealthy, whether for business reasons or pleasure, or both. Depending on the use, as a primary residence or a vacation home, most of such desirable locations share many of the same attributes and benefits, in addition to the non-optional beauty/charm/style/proper zoning… The most important ones are: price homogeneity, security, good schools, access to business centers, high-paid jobs, convenient to transportation, etc.”
This blog is courtesy of The Dawn Thomas Team who is an award-winning Real Estate Agent team at Intero Real Estate Services in Los Altos 650-701-7822. We help nice people with selling and buying homes in the greater Silicon Valley and Beyond!