The high-end luxury real estate market is big business in many cities across the U.S. While most areas across America have what locals would consider being expensive properties based on their local market, the luxury property sector around the world tends to be identified based on the city in which it is located. Therefore, international cities such as London, Paris, Hong Kong, and Dubai are easily identified with top-tier luxury properties. So even if investing in luxury real estate is currently out of your grasp, it might be interesting to know which U.S. cities are identified as the top luxury real estate markets in the United States according to American Housing Survey Data provided by the United States Census Bureau.
Here are five U.S. cities that are home to some of the most expensive luxury real estate property markets in America.
New York is the city where you will find the largest amount of most expensive luxury real estate properties in the U.S. This is hardly surprising considering the fact that it is home to the most expensive home ever sold in America. In January 2019, newly surfaced that a luxury New York penthouse at 220 Central Park South was reportedly sold for $238 million to billionaire Ken Griffin. With a median sq. ft. cost of $1,150, NYC is home to the highest property prices that you will find anywhere in the country. In fact, the Manhattan luxury real estate market is where you will find a selection of some of the most expensive properties anywhere in the world.
The NYC real estate market is one of the best markets to invest in. While it can be very competitive to penetrate this market, investors find satisfaction sourcing the best luxury properties.
The City of Angels undoubtedly has some of the most prestigious and exclusive luxury properties in America with a median sq. ft. cost of $1,250. Its renowned luxury real estate market has global recognition with Los Angeles being a preeminent luxury market for both domestic and international buyers. Property sales such as the $70 million sales of 1181 North Hillcrest Road in Beverly Hills to Swedish video game programmer Markus Persson in 2014, spurred a massive wave of ultra-luxury spec home building that some are now calling a Megamansion luxury home bubble in the area.
San Francisco and the Bay Area is one of several Californian cities that dominated the luxury real estate market in America in recent years. Home to Silicon Valley, the luxury real estate market in San Francisco comes in at a median sq. ft. cost of $1,150 according to the latest U.S. Census Bureau data. In fact, it is not unusual to find Billionaire homes in the area such as the Paul Allen Residence in nearby locations such as Atherton, CA.
There is a large collection of luxury real estate to be found in Miami. This is especially the case in areas like Miami Beach where a high median sq. ft. cost of $1,369 draws luxury buyers from around the world to luxury branded condo developments such as Missoni Baia Miami. The recent $50 million sale of the 3 Indian Creek Island property solidified Miami as a global hub for luxury real estate.
Washington, DC tops our list of the most expensive luxury real estate property pricing in America with a median sq. ft. cost of $1,600 according to data provided by the United States Census Bureau. However, the DC region is ranked #3 in the country, according to WikiLawn’s original study. With luxury real estate pricing in the DC region such as Amazon’s Jeff Bezos’ $23 million 27,000 sq. ft. home purchase being the most expensive property in Washington D.C. when he bought it in 2016 to a $62.95 million 48,000 sq. ft. home originally offered for sale in 2018 in the D.C. suburb of McLean, Virginia, it’s evident that markets in New York and Los Angeles continue to attain higher price points.
Important Factors To Consider When Investing In Luxury Properties
If you’re planning on investing in luxury properties, take note that there are some factors that’ll affect your overall success as an investor. It’s a good idea for you to consider these issues before making your final investment decision.
- Location: If the property’s location has limited or no access to water and utilities, the resale value is going to be significantly lower than those properties with access to utilities. This will also affect the taxes that you’re required to pay. Thus, a person who’s able to obtain water and utilities may be able to sell a property at a higher price than one who doesn’t have such access.
- Amenities: Investing in investment properties is all about maintaining a high standard of living and being happy. This includes the home, the amenities that are provided, and the upkeep to make sure that everything remains in good condition.
- Taxes and Estate Tax Rate: These are things to consider as well, especially if you have children or a large family. The estate tax rate is different from state to state, with the average being around 5%.
- Market Value: You want to determine the market value of the property before buying. If the market value is not high, you need to add a significant amount of down payment. If the market value is too low, you need to subtract the price of all the additional costs that you’ll have to incur in order to sell it at a profit.
- Additional Expenses: When determining the value of your property, you need to consider the additional expenses. Some examples of additional expenses that you’ll need to consider include a mortgage loan, the cost of real estate taxes, and the maintenance fees associated with the property. If you can’t cover all of these expenses yourself, it’s likely that you shouldn’t purchase the property in the first place.
- Rental Income: If you can make a reasonable profit from the sale of your property, it’s possible to get more than your initial investment. There are a number of investors who do just that. If you own a real estate that you plan on renting out to tenants, you need to calculate the amount of profit that you’ll be able to earn in rent, then compare that amount to the total expenses that you’re incurring on maintenance fees for your property.