The Usual Suspects May Still Be Bastions of Upscale Housing, but Luxury Is Finding a New Address in These Five Up-and-coming Us Markets
When examining the nation's top luxury residential housing markets, it may come as a surprise to find that luxury is on the move.
Yes, New York and Los Angeles remain as reliable as ever, since upscale housing intertwines deep within the fabric of both cities. And 21st-century boomtowns like Denver, Dallas, and Miami offer robust, if slightly narrower, markets for luxury lookers to plant their real estate cash.
But according to Coldwell Banker and their recent deep dive into the state of luxury housing, there are five up-and-coming markets to watch throughout 2020. These new upscale ports of call may surprise many, but when examining current tastes and trends, their new-found status makes perfect sense.
Let's take a look at these five new kids on the block and examine how they, along with 2019's top luxury markets, offer a window into where the future of luxury housing is heading.
The Fab Five
They may not be on the tip of your tongue when speaking about enclaves of high-end residences. Still, these five surprising markets are finding common ground with buyers who have (lots of) money to spend.
Boise, the first up-and-coming luxury market to watch in 2020, doesn't fit the typical mold of a significant luxury outpost—it isn't even near one. It's not a huge commercial, industrial, or financial center, it doesn't have a major international airport within the area, and it's nowhere near a significant body of water.
What it does have, however, is a relaxed, laid-back vibe, an endless array of outdoor activities (quality ski runs are as close as 20 minutes away), a lot of green space, and an emerging dining and nightlife scene. Boise is a city where you can buy into a wide selection of luxury housing—single-family homes and condos alike—without the big city burdens.
In what’s proven to be a common theme on this list, tech jobs are helping establish Boise as a hot market to live, work, and play. It's also an ideal landing spot for those not tied down to a specific office or city to ply their craft or people at the end of their careers who are ready for a slower pace of life.
The Coldwell Banker report cites that increasing luxury demand is producing million-dollar deals on the regular. This includes downtown condos drawing in baby boomers and smaller (relatively speaking) single-family homes outside of the central business district. In both cases, whether their investment is for a few weeks, a few months, or is a permanent move, affluent buyers fall in love with Boise's environmentally-focused lifestyle.
Charlotte, North Carolina
Like a number of other big southern cities (Atlanta and Nashville among them), Charlotte is having a moment. Long established as a financial and banking center—Bank of America and Brighthouse Financial are based here—growth has been slow and measured.
However, starting around 2010, people began flocking to the area—enticed by an expanding business community, the four-season climate, and big-city amenities teeming with southern hospitality. At the start of 2020, Charlotte stands as the 16th largest city in the US. By the time 2030 rolls around, it's predicted to rise to number 13.
This surge in new business and residents is a boon for the luxury market. The hot micro markets tend to be close to the central business and commercial districts. Condos and lofts regularly start well beyond $500,000, and many deals close at or near the million-dollar mark. There's also a desire for a live-work-play environment with high walkability and a vibrant social scene.
Cincinnati is a Midwestern, Rust Belt city on the rise. While that might sound impossible to some, Cincinnati is an outlier priming itself for a reemergence in the coming decade. After fifty-plus years of losing residents—the city's peak population reached half a million in the 1950s and 1960s—revitalization is beginning to shine a new light on this community in southwest Ohio.
At just over 300,000 residents (the metro area is two million-plus) it's a relatively small city, but it possesses a big-city mentality, including the country's largest historic district, two major sports franchises, and a number of celebrated museums. It's also a significant business hub, with Macy's, Proctor and Gamble, and Kroger calling the area home.
With an established and growing business core, new residents are gravitating to luxury renovations and large lot homes. The affluent housing market in Cincinnati, which might be the most diverse of our five emerging markets, is seeing single-family homes go for a median close to $700,000. Condos, which are a bit less popular, still command nearly $600,000, particularly in areas in and around downtown that have seen an influx of new restaurants and bars.
Colorado Springs, Colorado
For a case study in newly affluent buyers being priced out of one market and taking their liquidity to a less-competitive market nearby, look no further than Colorado Springs. With Denver—and its high-tech economy—roughly an hour to the north, the Mile High City's rising luxury home prices have squeezed out many younger buyers.
Those same buyers, it turns out, are the ones with the high-tech, high-paying jobs. Instead of compromising on space and location, they're taking their affluence to a whole new market. Colorado Springs luxury sales have grown 1,300% since 2016; critically, prices here, on average, are nearly $100,000 less than in Denver. These buyers don’t mind the commute if their real estate dollars go farther, and it’s not just in-state residents seeing the value.
According to the report, nearly 80% of buyers are making investments from out-of-state— California, Texas, even China. For many, the high-end, high elevation Colorado lifestyle was once out of reach. In Colorado Springs, they're living the high life at a very affordable price.
Fort Worth, Texas
Fort Worth's more glamorous sister city to the east, Dallas, may garner the bulk of headlines when it comes to luxury real estate. However, Cowtown—as the city is affectionately known—is making more moves. Over the past decade, Fort Worth's population has blossomed to nearly 900,000 residents. As the 13th largest city in the nation, it has all of the amenities of a big-time city—a vibrant downtown, outstanding dining and nightlife, world-class museums—but maintains a decidedly small-town feel.
Like other Lone Star cities, Fort Worth is home to an abundance of company headquarters— including American Airlines—and has the state's business-friendly policies and a much lower cost of living to thank for its expansion. That, and there's a lot of room to expand.
A lot of new development—much of it mid- to high-end luxury starts—is going up west of downtown, where untamed land seems to stretch endlessly. And while Greater Fort Worth encompasses a healthy number of super-luxe suburbs where the sky's the limit on home prices, within its borders the luxury is affordable, resulting in a buying surge. Half a million to $750,000 buys a lot in Fort Worth—in many instances, a lot more than more famous markets elsewhere.
So Why These Five?
The clear theme running through the report is that hot job markets breed hot luxury housing markets. Whether because of the entrepreneurship of high-tech firms and a need for highly-educated employees, or legacy stalwarts in retail and energy, high employment brings deep pockets.
As part of their report, Coldwell Banker also identified the top luxury performers for the prior year. That list includes Arlington, Virginia, Austin, Texas, Malibu, California, and San Diego, California.
Of course, a place like Malibu will stand out, given its proximity to nearby Los Angeles. In the same vein as New York and London and Paris internationally, it will always be a luxury hotbed.
But there's plenty of similarity between the other three top luxury performers of 2019 and the five up-and-coming 2020 markets.
You can draw a quick parallel between Austin and Fort Worth, where the latter is set to take over the mantle of the fastest-growing major city from the former. But the indices for Boise and Colorado Springs are also similar, whether because buyers are looking for new jobs, new luxury, new lifestyles, or all three.
Not to be left out, Arlington, Virginia also fits this comparison considering its proximity to a more prominent city in Washington, DC and the impending impact of Amazon bringing 25,000 HQ2 jobs to the area.
San Diego, notwithstanding its unmatched climate and oceanside location, shares similarities with Charlotte and Cincinnati. These established cities rely on a strengthening business climate to bring new buyers into the luxury market.
As we noted at the top, luxury is indeed on the move. If you aim to forecast even farther ahead beyond 2020, it's wise to pay attention to the four markets that did well last year and the five ready to emulate that success in the coming months.
Even if the markets themselves seem a little surprising at first glance, both prove luxury always seems to find a home at a familiar address.