Luxury Second-Home Buyers Are Investing in These Southwest Metros

The allure of a second home isn’t always a coastal condo or cozy chalet along a ski slope. Homebuyers looking to make an investment are flocking to cities offering a different form of tranquility.

Santa Fe, NM, and Prescott, AZ, made this summer’s Wall Street Journal / Realtor.com® Luxury Housing Market Ranking for high-end buyers who are looking for more value in real estate.

Realtor.com and the Wall Street Journal team up every quarter to identify the highest-performing and most attractive metro areas for luxury home purchases. They scored 60 different luxury housing markets across the country in categories that include: supply and demand strength, economic health, and quality of life.

The report found a shift in spending habits. Of course, there are still luxury buyers who are interested in investing in populated metros, but the recent report found that some of the top luxury markets are offering balance—meaning their dollar can go further.

Santa Fe and Prescott both have benefited from stronger second-home demand. The report’s data found the share of vacation homes in Santa Fe was 9.2% and in Prescott—7.7%, well above the U.S. average of 3.0%.

“Prescott also appeared on our list of places where retirees hold the most real estate wealth,” explains Anthony Smith, senior economist at Realtor.com. “A dry climate, lower insurance costs, relatively low property tax, and no tax on Social Security benefits certainly make it an attractive option for those looking for a second property and retirees.”

“Buyers are drawn to Prescott for the incredible panoramic vistas and the sense of seclusion and privacy it offers,” Anita Lang, award-winning luxury interior designer, tells Realtor.com. “It’s an escape from the density and pace of the metro area.”

Lang has worked with clients who have invested in homes throughout the Phoenix metro, Scottsdale, and even Prescott, a city under two hours north of Phoenix—where the luxury median list price is $1,482,600.

“There has been a notable influx of buyers from the California area and the greater Phoenix metro area,” Lang adds.

The same is true for Santa Fe, which offers both the desert and mountain lifestyle, like Prescott. New Mexico’s capital city has found an increase in people looking to invest in a second getaway. The price tag on luxury isn’t cheap. The median list price for a high-end property is $2,698,500.

“I think one of the really big draws in the second-home appeal is the natural beauty, the artsy culture, dry weather, and a tranquil lifestyle focused on health and wellness, mixed with some of the estate and inheritance taxes,” says Smith.

Luxury redefined

Luxury isn’t always in the multimillion-dollar range, as exemplified by St. Louis. For this luxury ranking, the median listing price for the top 10% of homes nationally was found to be just under $1.3 million, but St. Louis’ luxury tier comes in at just over $697,000—a little more than half the national benchmark.

The report reveals that St. Louis’ luxury buyers are looking for value, balance, and long-term livability.

“They know their home value is always consistently growing with the market, so it’s going to be a great investment,” Erik Petersen, real estate agent with Berkshire Hathaway HomeServices Alliance, tells Realtor.com.

The St. Louis agent says the communities just outside of the downtown metro offer a different type of luxury to appeal to a variety of buyers. There are luxury properties with acreage or those within artsy communities, with older, bigger homes.

“We’re still seeing aggressive offers and multiple offers over list price on these high-end properties,” says Petersen. “Many of them are going 10 to 15% over list price.”