July is Luxury Month at Inman. Tune in as we survey the evolving luxury market, explore emerging trends, and talk to top producers and influencers in the ultra-luxury space about how they got where they are today and the insights they’ve gained along the way. The month culminates with the announcement of the expanded Golden I Awards live onstage at Luxury Connect (July 29-30) in Las Vegas.
After a bustling season of international sporting events, the capstone is finally at-hand: The 2024 Paris Olympics.
Officially beginning today, the Paris Olympics will bring tourists from across the globe eager to take in the sights, sounds and tastes of one of Europe’s most popular destinations. But will it also serve as a springboard for travel — and real estate transactions — farther afield?
As a longstanding model for tasteful luxury, France embodies “quiet luxury” in its lifestyle, and in more remote regions, “quiet life” travel trends that have risen in the past several years. These trends reflect a growing demand for understated luxury living, and its travel counterpart, which has travelers seeking out calm countrysides and secluded beaches to encounter a more peaceful travel experience.
As individuals travel to Paris for the Olympics this summer, will they latch onto these trends, and embrace them when it comes to real estate?
France-based luxury agents said that, given reports of unusually low tourist demand, positive impact on the market may be delayed, but could still arrive later in the season as a “showcase effect” after seeing the city’s assets highlighted on TV. Many Parisians have fled the region amid the Games, according to reports.
Clinton M. Perrot-Schwartz | Engel & Völkers
“My feeling is that things will remain relatively calm during the remainder of the summer months, with a likely increase in activity expected in September and October as people return to the city,” Clinton M. Perrot-Schwartz, an advisor with Engel & Völkers France, said in an email to Inman.
Even with fewer physical visitors this summer, the Games have the potential to serve as a bridge to the country’s quiet luxury market.
Demand for travel to the Games is less than Olympic-sized, but agents aren’t fretting
The Games are the first that Europe has hosted since the 2012 London Olympic Games, and it appears that Paris overestimated tourist demand for the event. As of early July, occupancy rates were down 25 percent compared to previous years and hotels have slashed rates by about 40 percent from a year ago in an effort to book rooms.
The city has also implemented a variety of restrictions on moving about, designating numerous zones and regulations for traveling through them, depending on the mode of transit. Remarkably, all three Paris airports will also be closed Friday, the evening of the opening ceremony, as the area becomes a no-fly zone.
Agents said the city has been quiet, with few locals or visitors milling about.
“As of today, there has been a noticeable reduction in apartment visits, as many Parisians have left the city for the duration of the Olympics,” Perrot-Schwartz said in the last week of July. “It also appears that the usual influx of tourists has not materialized to the expected extent, with many international visitors, including many of my American clients, choosing to defer their trips to Paris until after the games to avoid the anticipated crowds.”
Historically, cities that host the Olympic Games can experience a boost in tourism after the fact, however, in response to visibility from media coverage of the Games and resulting infrastructure improvements. Perrot-Schwartz pointed to the extension of Paris’ metro Line 14, which now directly links to Orly Airport, an improvement helpful to locals and tourists alike.
“Overall, I believe these developments will bolster Paris’s reputation as a prime destination for both tourism and real estate investment,” he said.
Marie-Claire Sangouard | Engel & Völkers
Marie-Claire Sangouard, managing director of Engel & Völkers Côte d’Azur, added, “For the Olympics, the cities put on their best face, which has the added benefit of renovating and extending the property stock and its surroundings. In the end, property prices are all the better for it.”
Other France-based luxury real estate experts told Inman that the country, and Paris in particular, has such enduring appeal among American and other international investors that something like the Olympics was unlikely to move the needle much among would-be buyers.
“American buyers have always been present in Paris,” Marie-Hélène Lundgreen of Belles demeures de France Fine Residences Christie’s International Real Estate told Inman. “They represent 25 percent of our international buyers, so it’s the most important quota after European buyers, [which] represent 32 percent.”
Frederic Barth | Sotheby’s International Realty
Since there’s already such a strong affinity with American buyers in Paris, and the country more broadly, Frederic Barth of Côte d’Azur Sotheby’s International Realty in the south of France said that the Olympics would essentially be irrelevant to his local market.
“The Paris Olympic Games are unlikely to have a significant impact on real estate in the Côte d’Azur, and even less so among American investors, who are already familiar with Europe and frequently visit destinations like Italy, Paris, the Côte d’Azur and Spain,” Barth said in an email. “The Côte d’Azur already enjoys a strong reputation and does not need the boost from the Olympics.”
The quiet life
Agents agreed that France, of all places, knows how to do “quiet luxury,” the understated luxury trend that displays wealth and taste in a more restrained fashion and has taken the luxury world by storm. Its mastery of the trend could help bring even more attention on the country’s way of life as its popularity continues.
“Isn’t the definition of ‘quiet luxury’ the epitome of French luxury, all refinement and discretion?” Sangouard in Côte d’Azur mused.
Delphine Gibert-Avitan | Sotheby’s International Realty
The trend, Delphine Gibert-Avitan of Propriétés Parisiennes Sotheby’s International Realty said, is indeed “embodied through an emphasis on timeless elegance, quality craftsmanship, and discreet sophistication” in the French real estate market. “Properties often feature high-quality materials, historical significance, and thoughtful design that prioritizes comfort and privacy over ostentation. The trend aligns with the French appreciation for subtle refinement and enduring value, favoring serene, private residences over flashy displays of wealth.”
The quiet luxury trend has also permeated the travel sector in a fashion with the rise of “quiet life” travel, Pinterest noted in its summer travel report. Searches for “quiet places” and “calm places” have increased by 50 percent and 42 percent, respectively, since last summer, with many travelers searching for a digital detox. Other top-desired components of quiet life travel include solo travel, wellness retreats, “village vibes,” the countryside and island life, according to Pinterest.
Travelers who decide to explore Paris and other parts of France either during the Olympics or in its wake may find themselves falling into the quiet life of luxury.
“As for the south [of France], thanks to the continuing favorable climate and the massive influx of Parisians who preferred to leave the capital during the Olympic Games or simply took their holidays, rentals and sales are not being outdone either,” Sangouard said. “Tourists from all over the world are also taking advantage of the Olympic Games to continue or start their journeys in the south of France and come to enjoy the French lifestyle.”
Those seeking out quiet luxury and the quiet life may be drawn to the hinterlands, Barth said, with their stone houses, wooded plots and tranquility. Because their quiet attractions have drawn more visitors, some of these areas are seeing a bump in development, he added.
“Regarding real estate activity, this trend is now fostering development in charming villages that were previously overlooked.”
Americans, don’t be fooled
When working with Americans, France-based agents said one of the biggest misconceptions they encounter is that the transaction will play out in similar ways as it does in America. But things are done pretty differently.
Sonya Clarke | Engel & Völkers
“Things in France are slower, less transparent and very bureaucratic, so they should take time to choose a good agent who can take them through everything in their own language and who understands the meaning of ‘service,’” Sonya Clarke of Engel & Völkers Côte d’Azur said in an email. “The French way of life, which is the ‘charming,’ ‘quiet-luxury-life’ is perfect once you are settled, but can be frustrating when looking to buy a property — if everyone is enjoying a long lunch and not working evenings and weekends … well, you can see how it could be.”
At the end of the day, that “bureaucratic” process is made to protect buyers and sellers, Sangouard said, which is good for American investors to keep in mind.
Once an offer is accepted, it can take several months for a transaction to close, Gibert-Avitan added, and most documents are written in French, which means many Americans may need to enlist a translator or the services of a bilingual lawyer.
Perrot-Schwartz, an American who married into a French family, has gone through the process first-hand of learning how the French transaction is conducted differently than the American version, and draws on his dual experiences to help American clients.
Marie-Hélène Lundgreen | Christie’s International Real Estate
“I try to bridge this gap with my clients so that their purchasing experience is as seamless and stress-free as possible,” Perrot-Schwartz said. “For me, there are few things as satisfying as helping fellow Americans successfully and skillfully navigate the French real estate market.”
Those differences and potential added hoops aside, Lundgreen said that Paris, especially, represents the dream lifestyle come true for many Americans, which makes it all worth it.
“[Americans] don’t buy in Paris to make an investment for business reasons,” Lundgreen said. “It’s just for pleasure, because it’s Paris. It’s the clients who tell us it’s the most beautiful city in the world. It offers everything.”
The 2024 Paris Olympics may serve to fuel that dream further.
At Inman Connect Las Vegas, July 30-Aug. 1, 2024, the noise and misinformation will be banished, all your big questions will be answered, and new business opportunities will be revealed. Join us.
In the most recent development in allegations of sexual assault and rape against luxury brokers Tal and Oren Alexander, new reports claim that executives at their long-time firm, Douglas Elliman, and their most recent white-label partner, Side, knew about allegations of sexual misconduct while the brothers were associated with the firms.
Individuals familiar with the matter who spoke with The New York Times and The Wall Street Journal alleged that Oren had warned at least one senior executive at Douglas Elliman that he might be publicly accused of sexual assault. The executive reportedly dismissed the conversation at the time and did not think about it further.
“The recent lawsuits and press reports concerning the Alexanders are shocking and disturbing, and Douglas Elliman expresses the utmost sympathy for anyone who may have been a victim of sexual assault by them,” a representative for Douglas Elliman said in a statement emailed to Inman.
Three former members of Tal and Oren’s real estate team at Douglas Elliman told The WSJ that Oren would frequently boast about his sex life and show off pictures of him and his brothers — including security executive Alon Alexander who has also been accused of sexual assault and rape — with naked women.
Tracy Tutor of Million Dollar Listing LA fame also came forward to The New York Times and alleged that she had been drugged by Oren Alexander at a party in 2014.
“I am still struggling to remember the details,” Tutor said, claiming that after sharing a drink with Oren, she blacked out. “Staying silent for so long has been damaging on so many levels, and remembering now what happened feels debilitating.”
Another Douglas Elliman agent said he found Tutor that evening in a bathroom with Oren and removed her from the room. The agent did not disclose his name out of fear of retaliation. He said he informed a top executive at the firm about the incident at the time but did not file a formal complaint.
Barbara Wagner, a public relations executive who worked with Douglas Elliman for more than 16 years, also came forward to The Times to confirm that allegations against the Alexanders had been floating around the firm for a long time. Wagner now runs her own firm and is not affiliated with Douglas Elliman.
“These allegations were so widespread that they were common knowledge in the residential real estate industry for more than a decade,” Wagner said.
Top Douglas Elliman agent Jessica Cohen also reported being hospitalized after a party spent with all three Alexander brothers in 2010, although exactly what transpired is unclear. Time-stamped photos sent to The NYT show Cohen spending time with the brothers throughout the evening. A medical report shows that a bystander found her alone in the street that night and called 911. Later, she woke up at Manhattan’s Mount Sinai West Hospital; her vomit-covered clothes had been taken off her.
In trying to piece together what happened that night, Cohen said she talked it over with other Douglas Elliman colleagues, including former CEO Dottie Herman. Douglas Elliman said Herman had no recollection of the conversation.
Then in 2012, Cohen also recalled that evening in confidence to Douglas Elliman Inc. President and CEO Howard Lorber over a game of chess, telling the exec she believed she may have been drugged by Tal and Oren. She asked Lorber to keep the incident a secret, out of fear of the consequences if it went public.
“I was terrified,” Cohen told The NYT. “I was afraid they would hurt me.”
A Douglas Elliman representative said that no formal complaint was ever issued and that Lorber wanted to respect Cohen’s wishes regarding confidentiality.
“Douglas Elliman is committed to fostering a workplace environment that is safe, comfortable and free of sexual assault or harassment,” the firm said in a statement sent to Inman. “As to Oren and Tal Alexander, the Company never received any complaints of sexual assault or harassment, nor was management aware of any such claims. Had any such complaints been received, those complaints would have been thoroughly investigated consistent with our policies and procedures, as has been the case with complaints made from time to time against others at the Company over the years.
“Over at least a decade ago, a broker told a senior executive about having blacked out at a social event,” the statement continues. “She said that she did not know what, if anything, happened, she did not specify who may have been involved, and she insisted on absolute confidentiality. Douglas Elliman respected her wishes, and she has been a valued colleague at the company since then. Another senior executive who the broker says she separately spoke to has no recollection of speaking with the broker about this subject.”
The NYT report states that on at least two separate occasions before Tal and Oren signed on to launch Official with white-label firm Side, different brokers raised concerns to Side’s leadership. A statement sent to Inman from Side, however, suggests that such conversations could not have taken place, since the firm upholds a policy of confidentiality prior to launching new partnerships.
“Side does not share information about partnerships with outside agents prior to the actual launch of the new company, so it is not possible that agents from other brokerages could have informed anyone at Side about these allegations before the launch of the firm,” an emailed statement from Side said. “The first time we heard about the allegations was a day before they were published. We never would have moved forward with or maintained a partnership had we been aware.”
Brian Meier, who was with Douglas Elliman for over a decade and is now affiliated with Berkshire Hathaway HomeServices, said that at a dinner he was invited to with Side executives, he was specifically asked what he knew about sexual assault allegations against the brothers. Meier reported much of what others have also said as the investigation has continued — that their reputation for sexual assault had been an open secret in the industry for years. He also said that it was known throughout the firm that Lorber was aware of at least one such case.
“Side knew about this stuff and still went forward with them,” Meier told The Times.
A New York-based female broker who wished to remain anonymous also told The NYT that she told then-Side executive Meredith Moore she would not work with the company if it partnered with the Alexanders.
Moore then passed those concerns along to CEO Guy Gal but received little reaction. Moore was included in a series of Side layoffs a few weeks later.
“I passed along the message, but there did not seem to be a sense of urgency,” Moore said. “He did not bring it up again.”
The revelations about the Alexander brothers’ former brokerage firms having some knowledge about their problematic history with women comes a few weeks after news broke that the brothers have become the target of an FBI probe. Dozens of women have now made public their alleged encounters with the Alexanders, recounting stories of being drugged, sexually assaulted and/or raped by them, sometimes in coordinated attacks.
There are currently two active lawsuits against Oren and Alon, and one against Oren, Alon and Tal. The incidents referenced in the lawsuits date back to 2010 and 2012.
Tal and Oren both stepped down from their positions as co-founders at Official last month.
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Almost two-thirds of homes that were for sale in June had been listed for at least 30 days without going under contract. That figure is the highest share of any June since 2020.
At Inman Connect Las Vegas, July 30-Aug. 1 2024, the noise and misinformation will be banished, all your big questions will be answered, and new business opportunities will be revealed. Join us.
As the cost of owning a home has continued to rise, properties are sitting on the market longer, waiting for a willing buyer.
Almost two-thirds (64.7 percent) of homes that were for sale in June had been listed for at least 30 days without going under contract, Redfin reported on Wednesday. That figure is up from 59.6 percent the previous year, representing the largest annual increase in the last year and the highest share of any June since 2020.
The month also marked the fourth consecutive one in which the share of homes that had been on the market for at least one month increased on an annual basis.
Record home prices and higher mortgage rates are dissuading buyers, even though inventory is more robust than in recent years. In June, the total number of homes for sale posted its largest year-over-year gain on record because many listings are sitting on the market.
“Overall, the market is fairly stagnant,” Shay Stein, a Redfin Premier agent in Las Vegas, said in Redfin’s report.
“There are more listings hitting the market, but a lot of them aren’t in good condition or they’re not in a desirable neighborhood — and sellers are pricing unrealistically high. A lot of sellers are willing to let their home sit on the market until they get the price they want, and a lot of buyers aren’t willing to pay sky-high prices when mortgage rates are still high. My advice to serious sellers is to price fairly and make cosmetic repairs before listing.”
Properties that are move-in ready, relatively affordable and in good neighborhoods — as well as luxury homes that are priced well — are still moving quickly, Stein added.
Florida and Texas are seeing the largest rise in unsold inventory, Redfin reported, largely due to greater housing construction compared to other parts of the country. New homes are being built as demand dwindles, leading to higher levels of inventory.
Dallas saw the largest increase in stale inventory, with 63 percent of listings sitting on the market for at least 30 days in June, up 52 percent year over year. Meanwhile, in Tampa, 70 percent of homes for sale had been listed for at least 30 days, up from 60 percent in June 2023. In Fort Lauderdale, the portion of homes that had been sitting on the market for at least a month was 77 percent, up from 68 percent the previous year, while in Jacksonville, that figure was 70 percent, up from 61 percent the year prior. In Orlando, 69 percent of homes for sale had been listed for one month, up from 60 percent in June 2023.
The share of stale home listings grew on an annual basis in 44 out of the 50 most populous U.S. metro areas. The share of stale listings declined on an annual basis in five metros, but only by a small portion (2 percent or less): Nassau County, New York; New York, New York; Las Vegas, Nevada; Newark, New Jersey; and Warren, Michigan.
Meanwhile, 42.6 percent of homes on the market in June had been listing for at least 60 days without going under contract, up from 38.4 percent the previous year. That increase represented the largest such annual increase in almost one year. June also marked the third month in a row in which the portion of homes sitting on the market for at least two months has increased.
At Inman Connect Las Vegas, July 30-Aug. 1, 2024, the noise and misinformation will be banished, all your big questions will be answered, and new business opportunities will be revealed. Join us.
Some of homeownership’s largest hidden costs, including property taxes and homeowners insurance, are the biggest factors contributing to a growing number of mortgage delinquencies, a survey from Auction.com shows.
Hidden costs, like property taxes and homeowners insurance, were given a 37 percent risk factor for triggering mortgage delinquency by leaders in default servicing, according to the survey, making it the highest-ranked risk factor.
Consumer debt delinquencies were also ranked high at 32 percent, followed by rising unemployment at 15 percent, commercial mortgage defaults at 10 percent and falling home prices at 6 percent.
Auction.com’s survey was conducted in April. Respondents included banks, nonbanks, mortgage asset owners and investors, government agencies and government-sponsored enterprises.
Insurance costs have surged in many parts of the country in recent years, even as major insurance companies have pulled out of what are seen as high-risk states, like California and Florida.
Homeowners’ insurance costs nationally rose 33.8 percent from 2018 through 2023, according to S&P Global Market Intelligence. In Texas, rates jumped 60 percent during that period, while rates rose more than 50 percent across Colorado, Arizona and Utah.
Climate change and the risk associated with it has been a major factor contributing to rising costs, Benjamin Collier, an associate professor of risk management and insurance at Temple University, told Realtor.com.
“A major reason is climate risk, and that insurers have had broad losses from severe climate events over the past few years from hurricanes and severe storms,” Collier said. “If you look at places where insurers have been paying out more claims than taking in premiums over the last couple years, it’s half the states.”
Inflation in construction costs has also added to rising insurance premiums, Collier noted. But, more near-term, higher insurance rates are more likely to affect mortgage delinquencies in regions that have seen an uptick in climate-related events in recent years, he said.
“My expectation is that these challenges would be greatest in higher-risk areas, because those higher-risk areas are where we’re seeing insurance prices climb the fastest,” Collier told Realtor.com. “I also think that this problem might be greater for lower-income households in those areas, who are often living and working much closer to the edge of their available budget.”
On top of rising home insurance costs, many homeowners are also dealing with rising property taxes as a result of surging home values. Last year, the average tax on single-family homes in the U.S. rose 4.1 percent to $4,062, after a 3 percent increase the year before, a report from Attom Data Solutions shows.
The hidden costs of owning and maintaining a single-family home in the U.S. now average more than $18,000 per year, according to Bankrate. That figure translates to about $1,500 per month on top of a mortgage payment, up 26 percent from four years ago.
That’s a lot of additional costs for homeowners, especially for established homeowners who have been accustomed to lower costs during their tenure.
Foreclosure rates remain relatively low
Foreclosure activity has remained relatively low in the U.S., according to Attom, with 177,431 U.S. properties receiving foreclosure filings (including default notices, scheduled auctions or bank repossessions) during the first half of 2024. During the 2008 housing recession, about 15 times as many borrowers faced foreclosure. That figure from the first half of 2024 is also 4.4 percent less than what it was during the first half of 2023.
“Given the low default environment we’re in, this finding serves as an early warning of what could trigger more defaults in the future, especially if we continue to see more natural disaster events that, in turn, put more upward pressure on home insurance rates,” Daren Blomquist, a vice president of market economics at Auction.com, told Realtor.com.
“It’s important to note that even though rising hidden homeownership costs represented the highest risk factor of rising defaults, the majority of our mortgage servicing survey respondents believe that foreclosure volume will rise only modestly for the rest of the year (less than 5 percent),” Blomquist continued. “So these rising hidden homeownership costs represent the highest risk in a low-risk environment.”
If foreclosure rates do start to rise, they may begin in areas where those hidden costs are increasing the most quickly, Auction.com’s survey suggested.
For instance, foreclosure starts surpassed pre-pandemic levels in May in areas of the Gulf Coast, Texas and inland California, according to Blomquist — all areas that have seen storm and wildfire damage in recent years.
Foreclosure starts hit 135 percent of pre-pandemic levels in Houston, Texas; 93 percent of pre-pandemic levels in Riverside-San Bernadino, California; 100 percent of pre-pandemic levels in Tampa-St. Petersburg, Florida; 114 percent of pre-pandemic levels in Orlando, Florida; and 104 percent of pre-pandemic levels in San Antonio, Texas.
Those markets are located in states that are among the top 10 for insurance premium increases between 2018 and 2023, according to Attom’s data.
“Although it’s too early to fully connect the dots, we do see more rapidly rising foreclosure starts in many of the major markets where insurance costs have been rising,” Blomquist said.
“Absent of broader economic or housing market shocks, we would expect the default trend to follow the uneven regional pattern,” he added. “Markets with higher and faster-rising hidden homeownership costs would likely see a bigger increase in defaults. We are already seeing some signs this could be playing out when we look at recent foreclosure start data.”
McKillen joined the firm in early 2023 to spearhead Official’s expansion into Los Angeles. His departure comes weeks after Official co-founders and brothers Oren and Tal Alexander stepped down in response to mounting sexual assault allegations.
At Inman Connect Las Vegas, July 30-Aug. 1 2024, the noise and misinformation will be banished, all your big questions will be answered, and new business opportunities will be revealed. Join us.
Leading LA luxury broker Tyrone McKillen is bidding adieu to Official after spending less than two years with the brokerage, Business Insider first reported.
In early 2023, McKillen joined Official to spearhead the firm’s expansion into Los Angeles. At that time, McKillen brought over $500 million in listings with him, as well as his eight-person team, Plus Real Estate Group.
Official has confirmed that McKillen and his team will be leaving the brokerage.
“We have a deep amount of respect for Tyrone and support him in his new venture,” Nicole Oge, co-founder and chief growth officer at Official, said in a statement to the Real Deal.
Official and McKillen did not immediately respond to a request for comment from Inman. McKillen also did not respond to a request for comment from The Real Deal.
The move comes just weeks after Official co-founders and brothers Oren and Tal Alexander stepped down from their positions at the firm in response to mounting lawsuits alleging the brothers and their other brother, Alon Alexander, were perpetrators of rape and sexual assault.
Following McKillen’s departure, it is unclear in what capacity Official will continue to operate in Los Angeles.
McKillen’s exit will likely be a setback in terms of Official establishing itself in LA’s luxury market, which is full of competitive boutique firms and larger household names alike.
Currently, McKillen holds a mix of for sale and for rent listings representing more than $100 million in volume, according to his online profile.
The broker also founded and serves as principal of Plus Development Group, a LA-headquartered development and design firm, of which his team is also a part.
Last week, Tal Alexander denied the rape and assault allegations against him through a court filing made by his attorneys, who said they would push for a jury trial in their continuing fight against the allegations.
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