Globally, the U.S. is a deal in luxury housing

CHICAGO – June 14, 2017 – Luxury real estate buyers may find bargains in the U.S. compared to the rest of the world. The U.S. is hardly the most expensive when it comes to home prices in its luxury market.

Instead, China takes the world crown in that arena for the fastest-rising prices in luxury residential real estate around the world. Luxury home prices in Guangzhou, the capital of the southern province of Guangdong, rose a whopping 36.2 percent from March 2016 to March 2017, according to Knight Frank’s first-quarter Prime Global Cities Index, which ranks the top 5 percent of luxury real estate sales in 41 large international cities.

Meanwhile, the U.S.’s single-digit increases in that time period may seem more modest in comparison.

The top three global cities to land on the list are Guangzhou, up 36.2 percent; Beijing, where luxury home prices rose 22.9 percent; and Toronto, prices up 22.2 percent.

The U.S. cities landing on the Prime Global Cities Index include Miami (at number 14 on the list with a 4.1 percent year-over-year price increase), Los Angeles (prices up 2.5%), San Francisco (prices up 1.8%), and New York (prices up 1.7%).

“We’re seeing steady and sustainable luxury price growth in the key U.S. markets,” says Kate Everett-Allen, head of international residential research at Knight Frank. However, the cost of buying luxury homes isn’t rising quite as quickly in the U.S. as some other parts of the world because “there are a lot of major changes taking place both politically and internationally.”

Source: “The New Hot Spots for Luxury Real Estate Around the World,” realtor.com® (May 8, 2017)

© Copyright 2017 INFORMATION, INC. Bethesda, MD (301) 215-4688

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Is a $399K list price really better than $400K?

NEW YORK – June 19, 2017 – Why did my doughnut cost 99 cents this morning instead of a simple, even dollar? It turns out that the price has less to do with cost or value and more to do with how our brains process numbers.

Our brains are good at some things but not others. We are terrible at crunching numbers, for example.

But we excel at quickly processing our environment – for instance, if we see a long object moving on the ground, we don’t calculate its trajectory and motion. Instead, we just run – better to take the risk of embarrassment (a twig on the ground) than risk being bitten by a snake.

To do this, our brains need to take in a relatively small amount of information and make up the rest using previous experience, expectations, and predictions.

Your brain is a cheater

The brain cheats, taking shortcuts and making snap judgments instead of carefully deliberating the facts. Most of the time, this is a good thing, because shortcuts are efficient and usually get you to the same place as the long way.

All business owners should consider experimenting with prices. Thanks to brain science, we now know that even a one-cent change can make a big difference.

Consider using a number that the human brain is likely to round down to make your product appear to be a better value. As a consumer, just becoming aware of your brain’s shortcuts can make you a more careful buyer.

Numbers are an easy place for the brain to take a shortcut. We tend to be great at making estimations but horrible at rounding. When our brains see a price tag with lots of numbers, they automatically estimate, so $4.99 ends up closer to $4 than $5; $66,999 becomes $66,000 or sometimes even $60,000. Psychologists have known this for decades, and economists now begrudgingly admit it as well.

Psychological factors

Businesses have used pricing tricks for years to their advantage. They figured out by experimentation that tiny differences in pricing can make big differences in sales, and researchers studied this effect in depth in the 1990s and early 2000s.

They found that there is often a big sales difference between $2.99 and $3, but dropping a product’s price from $2.24 to $2.23 does not yield a measurable increase in sales. A penny is not always worth a penny.

Of course, there are other psychological factors at work in pricing. Relative pricing plays an important role: A product’s price compared to the products physically surrounding it can impact its sales. That is why gas stations not only charge per gallon to the nine-tenths of a cent but also price match to the competitor across the street. The human brain is especially good at making either/or comparisons and especially bad at decimals.

How shoppers can prevail

This strategy applies to shoppers as well. If you’re buying a 99-cent doughnut, think $1. A penny probably won’t break your budget, but rounding bias becomes more important for a larger purchase.

A $399,000 house is pretty much $400,000, but not in your mind: your brain’s shortcut system will try to suggest it’s closer to $300,000.

When the stakes are that high, don’t just think about it. Remember, our brains are better at thinking than “we” are and will continue to trick us!

To combat this, physically write down the price on a piece of paper, strike through it, and re-write the appropriate number by rounding up. The best defense is always a strong offense.

Copyright © 2017, USATODAY.com, USA TODAY. Jeff Stibel is vice chairman of Dun & Bradstreet, a partner of Bryant Stibel and an entrepreneur who also happens to be a brain scientist. He is the USA TODAY bestselling author of “Breakpoint” and “Wired for Thought.”

U.S. consumer confidence rose a bit in June

 NEW YORK – June 27, 2017 – The Conference Board Consumer Confidence Index increased moderately in June after dropping a bit in May. Overall, consumers have a rosier picture of their situation today, but they’re a bit less optimistic about the future.

The Index now stands at 118.9, up from 117.6 in May. The Present Situation Index increased from 140.6 to 146.3, while the Expectations Index that gauges attitudes about the short-term future declined from 102.3 last month to 100.6.

“Consumer confidence increased moderately in June following a small decline in May,” says Lynn Franco, Director of Economic Indicators at The Conference Board.

“Consumers’ assessment of current conditions improved to a nearly 16-year high (July 2001, 151.3),” Franco adds. “Expectations for the short-term have eased somewhat but are still upbeat. Overall, consumers anticipate the economy will continue expanding in the months ahead, but they do not foresee the pace of growth accelerating.”

Present Situation Index
Consumers’ appraisal of current conditions improved in June. Those saying business conditions are “good” increased from 29.8 percent to 30.8 percent, while those saying business conditions are “bad” declined from 13.9 percent to 12.7 percent.

Consumers’ assessment of the labor market was also more positive. Those stating jobs are “plentiful” rose from 30.0 percent to 32.8 percent, while those claiming jobs are “hard to get” decreased slightly from 18.3 percent to 18.0 percent.

Expectations Index
Consumers, however, were less optimistic about the short-term outlook in June. The percentage of consumers expecting business conditions to improve over the next six months decreased from 21.5 percent to 20.4 percent, however, those expecting business conditions to worsen also declined marginally – from 10.3 percent to 9.9 percent.

Consumers’ outlook for the labor market remained mixed. The proportion expecting more jobs in the months ahead increased from 18.6 percent to 19.3 percent, but those anticipating fewer jobs increased from 12.1 percent to 14.6 percent.

The percentage of consumers expecting an improvement in their income rose from 19.1 percent to 22.2 percent, but the proportion expecting a decline increased slightly from 8.7 percent to 9.2 percent.

The monthly Consumer Confidence Survey, based on a probability-design random sample, is conducted for The Conference Board by Nielsen, a global provider of information and analytics. The cutoff date for the preliminary results was June 15.

© 2017 Florida Realtors

Related Topics: Economic indicators

Miami condos prices rise 28.4 percent

September 20, 2012 09:45AM

 

The median sales price of Miami-Dade County condominiums rose 28.4 percent in August compared to the same period in 2011, according to a report from the Miami Association of Realtors. That was accompanied by a 10.8 percent increase in the median sales price of single-family homes. The median sales price for condos now stands at $146,500, and $195,000 for single-family homes. Home prices have risen for nine consecutive months in Miami. “Despite the shortage of housing inventory, Miami home sales remain strong and continue to drive significant price appreciation,” said Martha Pomares, 2012 chairman of the board of the Miami Association of Realtors. “There is evident demand for Miami properties, particularly from foreign buyers and investors who recognize Miami’s desirability and profitability.” — Alexander Britell