The Wonderful World of… Luxury?
By Mark Moffa
Managing Editor
The doom and gloom returned to the real estate world this week, as new home sales dropped 33 percent from April 2010. A drop was expected due to the expiration of the government’s tax credit, but “experts” weren’t thinking sales would drop this much (for the record, the year-over-year drop was 18 percent, and existing home sales—which represent more than 90 percent of available properties—were up 19 percent from a year ago). But amid all of talk of a new housing market collapse, there was other, less pessimistic real estate news that you may have missed.
The Walt Disney Co. unveiled its plans Wednesday to venture once again into real estate. Disney created the highly praised community of Celebration, Fla., in the 1990s, and now wants to pursue a luxury-only concept. It is proposing a 980-acre Golden Oak development in Orlando’s Walt Disney World, with up to 450 single-family homes priced at $1.5 million to $8 million. Offerings initially will range from .25-acre Village Homes to .5-acre Estate Homes and .75-acre Grand Estate homes. A $25,000 deposit is required for the first lots — plans call for 30 home sites to be offered this year, with the first homes complete next year. The entire project is on a eight-to-10-year timeline.
Critics are already calling the move risky. And it is certainly not without risk — what venture is? But Disney’s waltz into luxury real estate shows the world how confident it is in the high-end housing market. And with good reason. Camilla McLaughlin reported on our blog this week that some luxury indicators are very positive indeed. Arizona, Denver, and the Silicon valley are all showing a jump in sales of $1 million plus homes. Denver luxury home sales jumped 62 percent in May year-over-year, and affluent sellers are getting an average of 93 percent of their asking price there. California home prices jumped 21 percent in May. And foreign buyers with cash are pumping up sales in many markets.
When the largest media and entertainment conglomerate in the world makes a move like this, it is very telling. If Disney thinks it can make money in luxury real estate right now, then it probably can. And when these homes are sold, and years from now have increased in value, we’ll realize that it didn’t take a crystal ball to predict this project’s success.
For more, check out the Wall Street Journal article or visit www.disneygoldenoak.com.
