How was Davos? The skiing? Presentations? Good schmoozing?
Close any big deals?
If you didn't make Davos you’re
either not among the global economic elite, nor in the legion of consultants,
reporters, paparazzi and G5 crews who tag along to the World Economic Forum in the
exclusive Swiss enclave.
The economic impact of the Davos attendees, and those similarly situated financially, has
revived a term, “plutonomy” that gained cachet back in the boom days of 2005
with a report by Citigroup analysts.
In “Plutonomy: Buying Luxury, Explaining
Imbalances,” the lead report author Ajay Kapur coined the term that in 2014 has
emerged again to define an economy dependent on the rich more than the not so.
A recent CNBC segment noted that with substantial gains
in equities over the past few years the wealthy 1% (that overused but familiar term) now
account for 95% of income, and that 5% contribute 38% of consumption. That’s the
plutonomy, for which there are presumably plutonomists to help sort it all out.
With a robust equities market the past few years, one
trend has been for more flush investors to take profits that in turn flow to
high-end real estate, art, yachts and maybe a couple of those new Ghibli Maseratis that debuted in Super Bowl XLVII commercials.
In major urban areas such as New York City and Los
Angeles there are reports of a competitive buying frenzy in the $1 million and
more residential real estate segment.
A January 30 article in the Los Angeles Times reported
39,145 homes sold for more than $1 million in the state last year, a 45%
increase and the highest number since 2007. But the overall California market
rose only 0.6% the Times noted.
In the Northwest’s largest urban area, the Northwest
Multiple Listing Service reported there were 1,426 sales of homes at more than
$1 million in King County, which includes Seattle, up more than 50% over the
previous year.
Among the top Seattle-area sales was a home in Medina,
Microsoft chairman Bill Gates’ suburban neighborhood, for $9.75 million, and a
penthouse condo downtown for $6.2 million.
So how does this
relate to real estate in Central Oregon?
In
a capsule, the million dollar home market has grown modestly in the region, but
is a very thin slice of the whole pie.
(refer to table below).
Statistics
from the Multiple Listing Serivce of Central Oregon show there were 45 sales at more
than $1 million in all of Central Oregon in 2013, or 0.09% of the 4,393 total.
The sales volume of $57,283,576 was 4.46% of the total $1,285,972,542 volume
throughout the market.
In the
greater Bend area (including Tumalo to the west and Alfalfa east) there were 37
residential single family home sales at more than $1 million the past year, or
1.44% of 2,554 total sales and 5.39% -- $45,876,276 -- of the $851,270,643 total
volume.
Compare
those statistics to the nearly 65% of homes sold in Bend in the range of
$200,000 through $499,000, and 54% across the region.
Looking
back to the bubble years Central Oregon, sales of million dollar residences peaked
in 2007, when 135 homes closed at $1 million plus, 4.40% of all sales, on
volume of $191,286,666, which was 15.35% of the total dollars in residential
sales.
By
2009 the million dollar sales dropped to 41, only 1.27% of all closings, and
6.99% of volume.
