As demand for condos in California and New York continues to skyrocket, developers are finding it more profitable to expand into luxury properties.
While it’s still relatively new, the luxury condo market is expanding rapidly.
And many are making the jump from a single-family home to a luxury condo in the near future.
The new development boom in the California-Nevada corridor is driving luxury condo prices to unprecedented heights.
“You can go anywhere in the state and you can go to any condo, and they’ll sell for the same price, and it’s incredible,” said Mark Smith, who owns a luxury condominium complex in Los Angeles.
“But people want luxury condos.
People want that experience.”
And luxury condo owners like Smith, a real estate broker in the San Francisco Bay Area, say they’ve found a lucrative niche for themselves.
“They’re like the Kardashians of luxury, and people love them,” Smith said.
In fact, the popularity of luxury condos has created a luxury bubble that is being filled with people looking for a break from the gridlocked grid of California and the gridlock of the New York metropolitan area.
There’s a growing sentiment among luxury condo investors that they’re better off staying put in the Bay Area.
They’re not moving because of a shortage of affordable housing or the looming threat of a natural disaster, Smith said, adding that they’ve done everything possible to create luxury condos that are aesthetically pleasing, safe, and well maintained.
“It’s just been a trend in the last 10 to 15 years,” Smith explained.
“The trend is for luxury condo companies to go from single-story homes to condo units.”
The demand is so strong that developers are increasingly looking to build luxury condos on rooftops and in the hills in California.
“We’re seeing a trend of condominium towers and condos going up on hilltops, and that’s what’s really driving the prices up,” said David A. Tovar, the director of research at real estate consulting firm Zillow.
“There are these very tall buildings with very steep roofs that have these high ceilings and these high windows that look really cool, and those condos will be able to sell for a lot more.”
For some luxury condo buyers, the sky is the limit.
A recent study from Zillower found that just five percent of buyers who own luxury condos will actually move to the Bay area.
That number is down from 20 percent in the past few years.
That means that there are nearly twice as many luxury condo properties in the region as there were a few years ago.
The real estate website Zillovision reported that sales of luxury condo units in California jumped to $5.7 billion in the first quarter of 2019.
The number of units sold is also up from a year ago, with a record high of $6.7 trillion.
According to Zillowitz, sales of the luxury condos are also growing faster than the market as a whole, as the number of condos sold is growing even faster than overall sales.
“If you’re a luxury developer, and you’re building a lot of luxury condos, you’re going to have a lot to sell,” Tovary said.
“I’ve sold about 60 condos a day in the Golden State.
I’m seeing condos that sell for $1.7 million, $1 million a day.
That’s pretty crazy.”
The trend of luxury housing in California has been on the rise for years.
In 2014, Zillows analysis found that the median price of a luxury residential unit in San Francisco was $3.4 million, which is almost three times the median sale price for all homes in the city.
“What you’re seeing in the luxury market is this huge influx of luxury homes that are coming to the market,” Smith added.
“So it’s not just a trend, it’s a trend that’s driving demand and supply.”
And there’s not much the market can do to stop this trend.
Developers can’t control the whims of the market, so they’re relying on the city to provide housing for the rising number of luxury residents.
“City government has a responsibility to provide affordable housing for residents of all income levels,” Tavar said.
But even with the government providing housing, many residents in the area don’t want to live in luxury condos, and many are hesitant to move.
“In my opinion, it makes it harder to get people to buy a condo because it’s so expensive,” said John Zagaro, a member of the Zillowlers community board in Los Altos, California.
Zagarro is an advocate for affordable housing in the Los Angeles area, and he said he doesn’t think that developers should be making more money off the luxury condo market.
“Just because a condo is expensive doesn’t mean that it’s an affordable investment,” Zagalo said. Instead