Why Second (Third, & Fourth) Homes Are Selling and High End Real Estate Is Doing Well

Because the ranks of the world’s millionaires rose by 12%, for a second year, according to research at Boston Consulting Group as reported in Bloomberg:

“The number of millionaire households increased to about 12.5 million, the Boston-based firm said in a study released today. Singapore millionaires rose by almost 33 percent after jumping about 40 percent a year earlier. The U.S. had the most $1 million-plus households, with 5.2 million, followed by Japan and China.”

The wealth came, said the article, from improvement in the equity markets, the stock market, not from wealth creation such as new companies that create new jobs. That to me is a bit troubling. Trickle down, yes, but what we need now is job creation. Two things to be gleaned from this: one, here are your buyers for palatial real estate, how are you going to reach them? Two, if you are not on the internet and mobile and trying to sell multi-million dollar properties, you are missing 7.3 million households. Because those folks are looking at homes in the U.S.

Wealth has became far more concentrated. Millionaire households now control 39 percent of the world‚Äôs assets, which is up from 37 percent a year earlier. To bring this home, I was talking to a vendor at Preston Royal today who also has a store at Highland Park Village. He says he has barely felt the recession, and he thinks it’s because of his locations. Highland Park Village, he says, is turning into Rodeo Drive. But he feels increasing competition from other vendors who are almost desperate to get their foot in his door, who want his location. I got lucky, he said, but always wonder what’s coming down the pike. Which brings me to a conversation with a Realtor today at Cooper: in tough economic times, the location of a home can rescue values. It’s really just dirt, she says, that you are buying. Home are like cars — minute you turn that key in the ignition, it begins to depreciate.¬† So buy the best dirt you can buy in the best possible location.

Rodeo Drive, not too shabby.