Brandon Donnelly

Daily insights for city builders, delivered every morning at 6 AM ET. I’m Brandon Donnelly — a Toronto-based real estate developer and founder of Globizen. I’ve been writing here since 2013.

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Tag: luxury housing

  • Luxury housing surges in San Francisco

    The story of two markets continues. Median rents in San Francisco are down some 27% percent over the last year. Sales of homes priced under $300,000 are down by about a fifth. And yet, according to the Financial Times, sales are up significantly for homes priced above $2 million. For the top 5% of homes, prices ended the year up about 26.5%. Overall, the median home price in San Francisco was up 16.8% last year. It now sits at $718,000. As we’ve talked about before, much of this can be chalked up to the fact that the financial impacts of this current environment are being unequally felt. But I also see it as evidence that, despite all of the media headlines, many/most people aren’t actually betting against cities.

    Chart: FT

  • Location over space

    This recent article about the kind of homes that “wealthy millennials” are buying is a useful reminder of just how expensive homes are in San Francisco. But it’s also interesting in that it speaks to the types of homes that people with options are deciding to buy. In other words: If you had all the money in the world, what would be your ideal home? (According to the article, there are about 618,000 people in the US between the ages of 24 and 38 who have a net worth of at least $1 million.)

    Traditionally, “luxury” has meant lots of square footage and a big lot. But as we know, that view is changing for some/many people. We are placing a greater emphasis on being closer to the city and on living in more walkable communities. The article provides a number of examples where historically desirable areas have lost ground to areas that are now popular with the under 40 set. And in some cases, there has been a complete reversal; areas have gone from being more expensive to now less expensive (on a per square foot basis).

    It would seem that being able to work from anywhere hasn’t made us forget the city.

  • Prime residential pricing in 10 global cities

    The below graphs are taken from a recent (June 2019) report by Knight Frank on “prime” residential pricing across the world. They define “prime” as generally being the top 5% of each market by value. What these graphs show are the spread between the average price of a prime property and the top price achieved in that market.

    The most expensive market is Hong Kong. The average price of a prime property in 2018 was USD 4,251 per square foot (or USD 45,760 per square meter) and the top price achieved was in 2016 at USD 28,154 per square foot (or USD 303,051 per square meter).

    Using the 2018 average, a 350 square foot studio apartment would run nearly USD 1.5 million (or almost CAD 2 million), assuming there are “prime” studios available in the market. Remember, we are talking about the top end of the market.

    If you’d like to download a copy of the full report, you can do that over here.

  • Market vs. subsidized

    Miriam Zuk and Karen Chapple of the University of California, Berkeley, recently published a research brief called Housing Production, Filtering and Displacement: Untangling the Relationships. 

    It’s a nuanced look at the impact of both market-rate and subsidized housing production on affordability and displacement within the San Francisco Bay Area.

    The report is essentially a response to the debate around whether increasing market-rate housing production alone can address affordability and displacement concerns, or whether the only way to do it is through subsidized housing. What they found was that both matter, but…

    “What we find largely supports the argument that building
    more housing, both market-rate and subsidized, will
    reduce displacement. However, we find that subsidized
    housing will have a much greater impact on reducing displacement
    than market-rate housing. We agree that market-rate
    development is important for many reasons, including
    reducing housing pressures at the regional scale and housing
    large segments of the population. However, our analysis
    strongly suggests that subsidized housing production is even
    more important when it comes to reducing displacement of
    low-income households.”

    If you’re interested in this topic, I recommend reading the full brief. It’s only 12 pages. I particularly liked the information around filtering and how new housing steps down over time to ultimately serve lower-income households.