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Luxury Liftoff? The 10 Ritzy Regions Where Home Prices Are Soaring the Highest

In this era of intense partisanship and division, we can be grateful for the common denominators that bond us as Americans. Our national aversion to spiders, clowns, and trust falls. Our adoration of heroes, entrepreneurs, and puppies wearing Christmas hats. And, perhaps most of all, our endless fascination with luxury real estate.

Everyone, it seems, loves peeking inside the closed gates of exclusive abodes, or hearing of head-spinning megahome sales. But high-end real estate is much more than just sumptuous kitchens and sparkling infinity pools. Whether you’re an active participant in the nosebleed section of the housing business or just a bystander, luxury matters. Because the strengths or weaknesses of the upper reaches trickle down to us commoners: Higher home prices at the top pull up prices in the middle and bottom. And vice versa.

So the data team at realtor.com® set out to find the luxury neighborhoods where prices are growing—and falling—the fastest. We found some big changes afoot in some of America’s highest-profile bellwether markets.

Some of the most prestigious neighborhoods in the nation are seeing prices stagnate or fall after years of overbuilding—or because they simply ran out of land on which to erect new, extravagant homes. Foreign buyers in some perennially hot luxe markets have become more scarce. Meanwhile, neighborhoods that until recently weren’t considered the best of the best are taking off.

“The opportunity for new development is more limited now in the more well-known and established luxury locations,” says Jonathan Miller, a New York–based real estate appraiser at Miller Samuel. “Now we are seeing the [luxury] footprint expand into neighborhoods that are nearby or adjacent—areas that [until recently] weren’t thought of as luxury markets.”

To find these big-ticket hot spots, the realtor.com data team pulled housing data for more than 600 ZIP codes where the median home listing price was above $1 million between April 2016 and March 2017. Then we compared that 12-month period to the previous year to see which ZIP codes saw the largest median price increases and decreases. We eliminated ZIPs with fewer than 10 listings per month. We also limited our list to just two ZIP codes per state to give the list some geographic diversity.

Our definition of luxury is fairly broad: $1 million in some parts of New York City or San Francisco will not get you much. But in other parts of the country, you could score two mansions with that sum.

One thing that stays constant: For many Americans, luxury housing remains the brass ring, the golden ticket, the treasure at the end of the rainbow.

“The home more than anything else is a manifestation of who we are and the lifestyle we are trying to achieve,” says Mae Cheng, publisher and editor of Mansion Global, a luxury real estate site. “It defines us.”

Now let’s take you to the places where luxury is ascendant.

Neighborhoods where luxury home prices are rising the fastest

1. Santa Monica, CA

ZIP code: 90401
Median home list price: $3,045,000
Percentage increase in median home prices: 60.7%

When you think of beachfront living in Los Angeles, the images that come to mind from the movies—fab condos overlooking crashing waves—are more often in the adjacent city of Santa Monica.

The downtown neighborhood that stretches along a swath of Santa Monica’s beach and the retro amusement park on its pier has seen the number of sales and sale prices shoot up over the past 12 months. But it wasn’t always this way.

This area “was virtually nonexistent for single-family or condo units [for buyers] 10 years ago,” says Sandra Miller, a broker at Engel & Völkers Santa Monica. For decades, Santa Monica had virtually no new construction thanks to an anti-development push, she says.

But recently the community has loosened up those restrictions. The result has been swanky new condo developments such as The Seychelle and The Waverly, which offer amenities like a rooftop pool, yoga rooms, and pet spas. These buildings combined have more than 150 condos, many with picture-perfect views of the Pacific.

And they’re not cheap, with available condos ranging in price from nearly $1.9 million to almost $4.8 million. That’s what has helped to bring up prices so significantly in the neighborhood.

Buyers in this ZIP code are typically “upwardly mobile tech workers in their mid-30s to early 40s who enjoy the laid-back vibe of Santa Monica and can walk to work, shopping, dining, and the beach,” Miller says.

2. West Newton, MA 

ZIP code: 02465
Median home list price: $2,219,000
Percentage increase in median home prices: 60.4%

Just 25 minutes outside of Boston, the upscale suburb of West Newton has become a fave for Bostonians looking for more space, walkable communities, and an easy commute.

On the north side of Interstate 90 in West Newton there are homes priced between $525,000 and $2 million. But south of I-90 is where things get really pricey. The highest-priced home on the market is currently listed for $7.1 million. The seven-bedroom, nine-bathroom abode clocks in at 8,300 square feet and includes a fitness center and theater.

“There’s a big trend of all of the people coming out of the city, and they want a little bit of land and to [be near] the city, but they also want to be able to walk to Starbucks,” says local real estate agent Gary Kaufman of Keller Williams Realty. “They want the best of all worlds.”

Most of Kaufman’s buyers are in their early to mid-30s with at least one child. They’re usually selling their condos in Boston and using the money they get to buy four-bedroom, 2.5-bathroom Colonials in the $1 million to $1.5 million range.

“There’s a lack of inventory so that’s really pushing up the prices,” Kaufman says.

3. Palo Alto, CA (Silicon Valley)

ZIP code: 94301
Median home list price: $5,599,000
Percentage increase in median home prices: 59.1%

Located in the heart of Silicon Valley, homes in Palo Alto are inspiring frenzied bidding wars. This particular ZIP code includes neighborhoods such as Old Palo Alto and Professorville, where techies are demolishing older homes to put up multimillion-dollar mansions in their stead.

They can afford it. This is the most expensive neighborhood in our ranking, with the median-priced home now at $5.6 million. It isn’t uncommon to see places selling for as high as $10 million to $15 million here. It’s not surprising for the home of  Stanford University and a hotbed of startups.

“Prices have reached insane levels. They’re not affordable to most buyers,” says Avi Urban, a real estate agent at Pacific Union in Palo Alto. His buyers work either in tech or for companies that do business with tech firms. The median household income is $135,000, according to the U.S. Census Bureau. If you’re living in Palo Alto, you’re there to work.

For quite some time, Old Palo Alto has been seen as one of the best neighborhoods in this area. It has great schools and wonderful homes, some dating from the beginning of the 20th century. Competition to score a home here is fierce.

Another reason this area is booming? Bragging rights.

“It is very prestigious to have a Palo Alto address,” Urban says.

4. Kattskill Bay, NY

ZIP code: 12844
Median home list price: $2,365,000
Percentage increase in median home prices: 42.7%

Nestled along Lake George in upstate New York, Kattskill Bay is an ideal place for deep-pocketed buyers hoping to scoop up a scenic retreat far from the bustle of New York City.

Real estate prices are on a tear here. In fact, luxury prices in Kattskill are higher than in any other ZIP code in the state outside of New York City and its surrounding suburbs. That’s because builders are scooping up campgrounds and other lakefront property and building mansions on them, says Nabil ElDib, a local real estate agent with Davies-Davies & Associates.

“It’s considered one of the queens of the American lakes,” he says of the area. His buyers are typically CEOs, “investment bankers, hedge fund guys, doctors, lawyers, or entrepreneurs” dropping a few million dollars on a four- to eight-bedroom lakefront home. Most of these homes are used only in the summer by folks who enjoy more low-key vacations and evening fireworks on the water through the season.

“In the Hamptons, you have more attitudes,” he says. “People like to come here and be a regular person.”

5. Seattle, WA

ZIP code: 98101
Median home list price: $1,475,000
Percentage increase in median home prices: 42.1%

As local officials across the country fight to be home to Amazon’s second global headquarters, the city of Seattle continues to reap the rewards—and challenges—of being first to the party. All those tech gigs have spurred big demand for condos in this ZIP code, which cuts through downtown and includes the Seattle Great Wheel on Pier 57, a 175-foot, waterfront Ferris wheel.

“You can usually sum anything about Seattle real estate into one word: Amazon,” says Sam Chapin, a real estate agent at Engel & Völkers Seattle Eastside.

“Lots of young folks want to live and own condos close to work—and they have the money,” he adds. Condos are easy to sell in this neighborhood.

Most of the housing is condos in high-rises with retail down below, some including waterfront views.

For example, this $2.9 million, two-bedroom condo built in 2008 includes floor-to-ceiling views of the city skyline, Elliott Bay, and Olympic Mountains.

6. Bellevue, WA

ZIP code: 98005
Median home list price: $1,480,000
Percentage increase in median home prices: 41.5%

If the idea of living in a space-challenged Seattle condo has you yearning for more room, Bellevue might be for you. It’s certainly becoming increasingly popular with well-paid techies who want to settle down in the suburbs to raise their families.

This particular ZIP code, which is just outside of Bellevue’s downtown and is about 10 miles from Seattle, includes everything from larger houses to full-fledged mansions on 5-acre lots with horse stables. Because if you can afford to buy here, you can afford horses—or pretty much whatever else you’d like.

“Bellevue has a newer feel” than Seattle, Engel & Völkers’ Chapin says.

7. New York, NY (Manhattan’s Lower East Side)

ZIP code: 10002
Median home list price: $1,806,000
Percentage increase in median home prices: 39%

Overall, luxury real estate sales and prices in the Big Apple are down. That’s because developers oversaturated the market with new, ultrahigh-end condos with every perk and amenity imaginable. But not so much in this swath of the Lower East Side and Chinatown.

This area was one of the last parts of the city to see a new wave of pricey developments. Several new condo buildings have opened in the Lower East Side recently, including the 28-story 215 Chrystie Street building. It’s a mix of upscale hotel rooms and 11 condominiums, some with 360-degree views of Manhattan. It’s no wonder neighborhood prices are soaring.

“The financial district and other areas already had their renaissance,” says Miller Samuel’s Miller. Now it’s the Lower East Side’s turn.

8. Aspen, CO

ZIP code: 81611
Median home list price: $2,264,000
Percentage increase in median home prices: 32.3%

When it comes to ski towns, Aspen continues to reign supreme. Wealthy buyers from across the country flock to buy investment and vacation homes in this former silver-mining town in the Rocky Mountains.

Right now, the downtown area of Aspen is especially hot. So is the historic West End neighborhood, which is full of Victorian-style homes that were occupied by mine owners a century ago. Now buyers are scooping up these places and doing top-to-bottom renovations, giving them a mountain-contemporary fusion style that can bring the price to almost $3,000 per square foot.

“A lot of people with substantial corporate wealth, who in the last two years have rented and waited to see [what they want], are now pulling the trigger,” says Wendalin Whitman, president and owner of Whitman Fine Properties in Aspen.

That pent-up demand has sent the higher end of this market into the stratosphere. For example, the price tag on this contemporary four-bedroom, 4,800-square-foot home, which is scheduled to be completed next year, is a cool $25 million.

9. Kilauea, HI

ZIP code: 96754
Median home list price: $2,491,000
Percentage increase in median home prices: 31.5%

There is no shortage of multimillion-dollar homes with stunning ocean views in this Polynesian community.

Homes on the verdant island of Kauai are often relatively modest, one- and two-level structures. This three-bedroom, plantation-style home, which has an art studio, open kitchen, and cypress wood floor, is priced at $1.8 million.

“It really boils down to very affluent people realizing it is a very special place,” says Rohn Boyd, a broker at Kauai Luxury Real Estate. “For most buyers, this is a second, third, or fourth home.”

And most of those ultrawealthy buyers want to buy in a mile-long strip along the beach, which has just under 60 properties. These homes are seeing the biggest price increases, Boyd says.

10. North Chatham, MA

ZIP code: 02650
Median home list price: $1,592,000
Percentage increase in median home prices: 30.9%

North Chatham is a small seaside town in Cape Cod that’s become a destination for wealthy Bostonians and New Yorkers looking to get away from busy lives in the city.

“We have a limited supply [of homes] and high demand. It is the tightest market in over 15 years,” says Chris Rhinesmith, broker and owner of Pine Acres Realty in Chatham. “You tend to get a lot of water frontage, large properties, privacy, beautiful views, and direct [ocean] access.”

Home buyers often come to North Chatham with cash to burn. They buy up more affordable old cottages that you wouldn’t find in Nantucket or Martha’s Vineyard, demolish them, and put up mansions. So most of the really expensive homes have been built over the past decade.

“The Hamptons [on Long Island] attracts your celebrity type. Most buyers come here because we are low-key, more casual, and more family-oriented,” Rhinesmith says.

Neighborhoods where luxury prices are down the most

Some of the places where luxury prices dropped the most are also some of the best-known markets. Developers overbuilt in many of these places, or ran out of space to build.

Look no further than our No. 1 ranked neighborhood, the 10004 ZIP code in New York, NY, where prices fell 35.6%, to $1.2 million, over the past 12 months. The ZIP code includes Battery Park—where actor Leo DiCaprio lives—at the tip of Manhattan. After 9/11, this area near the World Trade Center saw a flurry of development. Now it’s seeing a flurry of vacancies.

“In Battery Park there is a whole lot of choice, [and building] has paused,” says Dolly Lenz, a luxury real estate agent and founder of Dolly Lenz Real Estate in New York. “When there are so many choices, buyers make no choice.”

Over the past year, available listings jumped 38% in this Battery Park neighborhood.

Another big-name neighborhood that saw a big decrease was the 90211 ZIP code in Beverly Hills, CA. Prices in this area dropped 28.2%, to $1.4 million, ranking it seventh on our list. Part of that drop could be a result of much of the luxury market having been bought up: Listings in Beverly Hills dropped 31% over the past 12 months.

Other neighborhoods that had the biggest price decreases include Laie, HI (96762), at second, followed by Denver (80246); Bedford Hills, NY (10507); Paia, HI (96779); and Somerset, CO (81434), at sixth. Arlington, VA (22213), ranked eighth, followed by Delaplane, VA (20144), and Santa Barbara, CA (93103), at 10th.

The post Luxury Liftoff? The 10 Ritzy Regions Where Home Prices Are Soaring the Highest appeared first on Real Estate News & Insights | realtor.com®.

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