In the years following the global recession, inventory shortages and pent-up demand made luxury an easy sell. From London to L.A., multimillion-dollar mansions were the investment of choice for the world’s global elite. New construction booms in high-density markets like Miami and Boston brought prices never seen before. While high-end real estate does not always play by the same set of rules as other sectors, most real estate veterans knew that the frenzied purchasing party would eventually end. 2019 has so far proven free-market ideologies right. We’re hearing the news media use words like “self-correcting,” “transitioning,” and “normalizing” to describe the new luxury real estate cycle. But if you want to know what is really happening on the ground in key luxury meccas around the world, you still need to consult the experts.
We asked four wildly successful luxury real estate insiders (who recently got together for a sold-out panel called “Tipping the Scales” at the Coldwell Banker Gen Blue 2019 conference) to lift the veil on their respective marketplaces. From Beverly Hills, we have the legendary Jade Mills, the No. 2 real estate agent in the nation for the Coldwell Banker® brand, who achieved the highest sales volume on record of any agent in Coldwell Banker history and just recently surpassed an astounding $5 billion in career sales. Across the Atlantic, Valentina Bodini — the broker/owner of Coldwell Banker Bodini International Real Estate out of Rome — has consistently been named a top Coldwell Banker agent in Italy, as well as a top European agent. Ricardo Rodriguez continues to break records in Boston, as he leads the No.1 sales team in New England and ranks as the No.1 Latino agent in the U.S., based on sales volume. And finally, Christopher Fling — one half of the powerhouse pair, Fling Yang & Associates — has been blazing trails in Silicon Valley, one of the hottest real estate markets in the country right now. The team just pulled in $50 million in production during the last 12 months alone.
What follows is a lively roundtable discussion between these four Coldwell Banker all-stars, who revealed their valuable insights on everything from design trends to the most-wanted amenities and evolving definitions of luxury.
Coldwell Banker Global Luxury First, let’s establish the luxury price threshold in your market.
Valentina Bodini In our market, it’s hard to give a range. The concept of luxury is very wide. As it is in the United States, I would say that the minimum luxury price point is about $1 million. But it is not price that identifies luxury. For us, real luxury is tied to our country’s cultural and historical patrimony. Our most important challenge is to try to connect these historic properties with all the facilities of a modern and luxury one.
Christopher Fling The Silicon Valley luxury market doesn’t start until about $4 million. Land value alone is about $2.5 million, and you need the extra money to build.
Ricardo Rodriguez Our luxury market threshold begins at about $2.5 to $3 million in Boston, but at the same time, not every property qualifies as a luxury property.
Jade Mills Our luxury market starts at about $3 million. But I hate to say that, because I feel everything is luxury. If you have a client who wants a $1 million condo and that is his or her luxury, then that is luxury. I agree with Valentina. You cannot put a price on luxury.
Coldwell Banker Global Luxury How would you define luxury today?
Jade Mills Luxury is perception. So whether it is a $1 million condo or a $245 million property, it is in the eyes of the beholder. I really feel that we try to sell everything as luxury because it is someone’s luxury.
Ricardo Rodriguez I agree. Expensive doesn’t equal luxury. Luxury is experiential.
Jade Mills Yes!
Ricardo Rodriguez When I apply that to real estate, it is about creating that experience. Regardless of the price point, I want to make sure that the experience is elevated.
Valentina Bodini For me, luxury is comfort. It’s a personal feeling connected with lifestyle. But it also depends on you, who you are and who you want to be. It is hard to define luxury. For us in Italy, luxury is so connected to our culture, our history and our artistic and architectural patrimony.
Jade Mills Today, you can Google almost anybody. All you need to see is what they like. Luxury can be around golf or a great meal. You need to know clients, what they like and what is luxury to them.
Ricardo Rodriguez You see this in different markets — how luxury is perceived in L.A. vs. New York. If you go to L.A., a white T-shirt and comfortable jeans and sneakers might be a luxury. When you go to New York, it’s a nice suit.
Christopher Fling Luxury is time and community. These are such valuable commodities. We just don’t have enough time to do everything we need to do. Our clients lead such busy lives, and they are connected 24 hours a day, so the time they save by living closer to a city center or closer to their work — that’s a value to them. That can be very luxurious to have those things.
Coldwell Banker Global Luxury What is the most interesting real estate trend to come out of 2019 so far?
Valentina Bodini In Italy, the most important and interesting trend to come out of 2019 is the specific attention being given to the luxury market. In 2017, the Italian government introduced a flat tax to attract wealthy people to move to our country. Those who move to Italy only have to pay a flat tax of 100,000 euros a year, regardless of their income. Of course, they have to buy a house. So, now we are seeing the process of internationalization in our country. We have already had 160 demands coming from wealthy people who want to take advantage of the new flat tax.The flat rate tax is reduced to 25,000 euros for each family member as well. So that’s very good.
Jade Mills Yes, that is very good.
Valentina Bodini I recently sold an important villa in Rome and the buyer is Italian, but he had sold his company in the United States and now he’s moving to Italy because of the flat tax. It was one of the most important sales in Italy. It sold for 19 million euros — which, for us, is incredible because most luxury sales are around 5 or 6 million euros.
Jade Mills I would say that the trend is the changing design styles in Beverly Hills. We’re seeing a shift from the modern white box to more warm contemporary or contemporary farmhouse styles. People want more warmth.
Ricardo Rodriguez We’re seeing a stronger intersection between technology and lifestyle than ever before. We are using technology more and more as a means to articulate our way around a home. I think this concept is relatively new. Smart home technology has been around for a while, but it has never been fully integrated. It was more of an “on/off” experience. But I think it has become a more immersive experience. It’s really interesting to see a company like Bang & Olufsen enter this space, where it is developing intuitive integration with your daily routine. As soon as you wake up, your phone turns on and your blinds open up and your coffee machine turns on. Or you arrive and your gate opens. For instance, we just released this penthouse that is fully voice activated. “Alexa, turn my lights on.” Or “Alexa, turn on my fireplace.” These are really interesting developments.
Christopher Fling The acceleration of property values in our area is so tremendous that we’re seeing some people begin to purchase additional properties for their family members. Community and family are so important to our clients. They can’t imagine a time when their children would be able to afford to stay in the area. So instead of our clients looking to invest in properties in multiple markets, they are looking to diversify less and find property in our market. That way, they know that their family can stay in Silicon Valley. They are buying additional properties with the intention that when their kids are finished with college, they can have a place to live in Silicon Valley.
Coldwell Banker Global Luxury Mansion Global called this year “The Year of the Vanishing Buyer.” What’s your response to that?
Ricardo Rodriguez I would call 2019 “The Year of the Thoughtful Buyer.”
Jade Mills Thoughtful and more careful.
Ricardo Rodriguez Not vanishing.
Jade Mills In the latest report that the Coldwell Banker Global Luxury® program just released, it noted that three quarters of billionaires today are self-made. When you make your own money, you are much more careful about spending it.
Ricardo Rodriguez Absolutely. What would have taken three months to convert a buyer is now taking six months, just as an example. But they are converting — it just takes more time.
Coldwell Banker Global Luxury Ricardo, you are primarily focused on the new construction sector. Would you say that everyone wants “new” right now? What do you think is driving this trend? And how do you handle listing older housing stock?
Ricardo Rodriguez Who doesn’t like new? If you are given an option between an old house that needs renovation and a new house, you are going to go toward the new — whether it has been refurbished or built from the ground up. The inventory levels of new construction that Boston is experiencing right now have to do with what happened during the recession. Development takes a long time. So the projects we’re seeing coming on the market now were really in the works four or five years ago. What happened during the recession was that no one was building. After it began to turn around, people wanted to invest again. What Boston is experiencing now is the halo effect of economic recovery, but that’s only because construction takes so long.
Coldwell Banker Global Luxury So do most Boston buyers prefer new?
Ricardo Rodriguez There are always going to be those buyers who still want to go in and make their own touches on a house. It’s also market specific…and sometimes it’s even micro-market specific. If you look at a city like Boston and you are location sensitive and you want to live in the historic core of Boston, you are going to have to deal with renovations at some point.
Coldwell Banker Global Luxury What about you, Valentina? It must be very different in Italy.
Valentina Bodini In Italy, we don’t have much new construction. We have reconstruction. Our government is also a little against new construction and against overbuilding. So there is greater focus on rebuilding and renovating, because Italy has 75% of the artistic and historical patrimony in the entire world.
Jade Mills People are tired of buying older properties and then having to spend a year or more to remodel. They feel new is better. We are living in an era of instant gratification. People just want to move right in. Even when they buy new construction, they will sometimes remodel, but at least they can move in right away and remodel slowly. We see so many buyers who won’t even want to look at an older home that needs to be remodeled. When we have older listings, we always advise the sellers to paint and stage so they present better.
Christopher Fling In Silicon Valley, for a professional person to be able to afford a home, it’s a dual-income household. They do not have time to renovate after they have made the purchase. So our market is somewhat unique. We work with our sellers three to six months prior to a listing date, and they typically move out. We come up with a strategic marketing plan even before it’s brought to market.
Coldwell Banker Global Luxury What are the hot new amenities that everyone wants?
Ricardo Rodriguez It’s market-related. In Boston, it’s garage parking. But maybe you don’t have that issue in California or other places. Sometimes you can spend a million dollars on a parking space, and it tells you just how much something as simple as parking has become an amenity.
Christopher Fling The Bay Area is so environmentally sensitive that people really appreciate green features. People look for car-charging garages and solar panels on the roof. We also have a large international population, so multigenerational living — places that can accommodate long-term family visits or self-contained units to live in — are in high demand.
Jade Mills Our market fluctuates between Beverly Hills and Trousdale. Trousdale became so outrageously expensive that people went back to the flats. Right now, the flats of Beverly Hills are in demand, and Trousdale is not as in demand as it once was, because there is not a lot of land and it’s all about the view. A lot of people want to be able to walk. They want to be close to restaurants and shopping on Rodeo Drive. Or they want an East Beverly Hills location, so they can walk into West Hollywood. It goes between having a view and not being able to walk, and being in the flats and being able to walk.
Valentina Bodini In Rome, people look for outdoor spaces in penthouses. Roman terraces are very famous, because the views are priceless. And we have good weather. Parking in the city center is also very hard to find.
Jade Mills If weather could be considered an amenity, then we have a lot of people moving to L.A. for our weather.
Christopher Fling The schools — Silicon Valley public schools are some of the best in the country. A lot of people made their fortunes in San Francisco, but they want to move south for the schools. And the weather! It can be cold and foggy in San Francisco in the summertime, but it’s warmer in the south.
Coldwell Banker Global Luxury What is the biggest challenge in luxury real estate at the moment?
Valentina Bodini For us, the greatest challenge is creating a real network of luxury agents — not just a Coldwell Banker network, but a general luxury network.
Jade Mills We can send you lots! [laughing]
Valentina Bodini Thank you. We want to provide the best possible services to the customer. That is why we are so happy to belong to the Coldwell Banker brand, because it will give us an opportunity to provide these services. Italy does not have an MLS, and we don’t even have a real estate agent association. It is hard to organize and know what kind of colleagues are in front of us. Jade said before that you can Google anybody, but in Italy, it is not that true for us. It is harder for us. We don’t have all the tools that you do in the States. That’s why we say that the relationship with our fellow agents is the most important base.
Jade Mills Our biggest problem is inventory. We do have inventory, but it’s not good inventory. When a quality house is listed, it’s often priced very high. So when we get something we can sell, it’s priced so high that it’s not reachable for the person who has made their money.
Christopher Fling It’s similar in our market, too. But if we take a longer-range view, I think the challenge is going to be selling the larger estate properties that are going to come on the market in the next 10 years. How do we help that seller prepare to sell now? Because I don’t know that the market is going to get stronger for that kind of property in our area. Those estates that sit on 1-acre lots and are secluded from city amenities in places like Atherton, Hillsborough and Los Altos Hills are already beginning to linger—
Jade Mills It could change —
Christopher Fling It could, but I think sellers have to be cognizant of what could happen in 10 years. They will need a longer-range view of how long it could take to sell their property.
Ricardo Rodriguez I think it’s price. The luxury market drives prices in other market segments, and it’s creating a halo effect of unaffordability.
Jade Mills Us, too.
Christopher Fling Yes, it’s created this segment that is not traditionally a luxury property. It’s just expensive property.
Jade Mills And price per square foot is skewed now. Because if something sells for $2,000 per square foot, the neighbor down the street will say, ‘Well, they got 2,000 per square foot, and that’s what we want’ — even they have an old tear-down.
Coldwell Banker Global Luxury If you had to brand 2019, what would you call it?
Jade Mills I agree with Ricardo — it’s the year of the more thoughtful buyers. We just came off a real estate cycle where if buyers wanted a $10 million house, they would just buy it. Those days are gone. People give the real estate purchase a lot more thought and consideration. And they also wait because they think the price will come down. We didn’t used to see that. It’s the year of the more discriminating buyer.
Christopher Fling In our market area, there is some price fatigue. I think it is absolutely going to create a longer analysis period. The buyers are going to be more analytical about what happens if they can’t exit like the last sellers were able to exit. 2019 is the year of cautious deliberation. I think there is a greater balance. I think sellers are more cautious, too. They wonder, ‘Should I wait to sell or should I take advantage of the market that we have right now? Is it going to continue to explode like it has been over the last four years?’
Jade Mills Our sellers are not being realistic with pricing. They are still expecting to get what they could have three years ago.
Ricardo Rodriguez It’s the year of a strong but steady market. We’re going back to a normal pace. Because it has been frantic for years, and now it’s what it needs to be.
Valentina Bodini 2019 is the year of consolidation. The process of internationalization is being consolidated in Italy. Before, our clients came from Russia or the United States, but now we have clients coming from all over the world, from Europe, Germany, Sweden and the UK. The kinds of customers have increased, in general. We believe this can be attributed to the flat tax.
Coldwell Banker Global Luxury Thank you for your time. To have all of you in the same room at the same time has been a treat — and truly revelatory.