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How Do Rich Buyers Choose a Luxury Home?

Most people buy the largest home they can reasonably afford, but upscale buyers have a “sweet spot” for size, future costs and the overall hassle of maintenance.

NEW YORK – The pandemic pushed more homebuyers to expand their living space, but for the subset of buyers that can afford an ultra-large home, there appear to be limits on how big they want to go.

“Most people don’t see a necessity for 10-bedroom homes,” says David Martin, CEO of Terra, a Miami-based development firm.

For some wealthy buyers moving from the city to the suburbs, greater space may have been a primary motivator. But they’re finding that almost unlimited space might not be such a good thing either.

“There is a sweet spot when it comes to square footage,” says Kim Bancroft of Daniel Gale Sotheby’s International Realty on Long Island, N.Y., in an interview with Mansion Global. “People are valuing experience over luxury goods and putting their money toward homes with land and room for kids to play. But they want a manageable space that is not overwhelming.”

Property taxes can be another factor behind the appeal of midsized luxury properties in suburban areas.

“Taxes affect buyers, even at the luxury end,” Bancroft says. “On a huge, magnificent home, the taxes can be $90,000 a year, and buyers may be able to afford that but don’t want to pay so much. Midrange homes are more manageable not only from a property and acreage perspective but also from a tax perspective.”

Source: “Not Too Big, Not Too Small: The Sweet Spot for Luxury Home Sellers,” Mansion Global

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