PARSIPPANY, N.J., July 11 /PRNewswire/ -- Luxury homeowners in the United States are continuing to pour significant amounts of money into their high-end homes, according to the latest Coldwell Banker Luxury Index. Whether through tax refunds or home equity loans, home improvements among the affluent continue unabated which, Coldwell Banker says, is leading to higher home prices.

"With more and more dollars allocated toward renovations, upgrades and additions, it is no surprise that property values continue to appreciate," says Jim Gillespie, president and chief executive officer of Coldwell Banker Real Estate Corporation. "The home improvement frenzy is likely a key reason why we are seeing a significant rise in sales of pricier homes through our luxury division, Coldwell Banker Previews International."

Gillespie pointed out that sales of homes in the $3 million plus range grew 35 percent in the first quarter of 2005 compared with the same period in 2004. "This is in line with the study's findings, as the number of respondents who indicated they purchased a home in excess of $3 million tripled since the initial index in August 2004. The continuing home improvement craze is a boon for the real estate market and a major reason for rapid appreciation," he says.

The Coldwell Banker Luxury Index is a survey of 300 U.S. homeowners with an income over $100,000 and who have purchased a house valued at over $1 million over the last two years. The survey was conducted via a series of phone interviews by independent market research firm International Communications Research in March and April of 2005 and commissioned by Coldwell Banker Previews International.

    Key home improvement findings from the 2005 Luxury Index revealed that:
     * Thirty-one percent of luxury homeowners expect a tax refund. Of those,
       the majority (51 percent) intend to put that money back into their
       homes.

     * Thirty-one percent will expand or remodel their residences in the next
       12 months.

     * Of the 36 percent of luxury homeowners who have refinanced or taken out
       a home equity loan in the last 12 months, 42 percent of them will be
       using the funds for home improvement or other real estate purposes.

"The affluent American's most valuable asset is his or her home, according to our Luxury Index," Gillespie continues. "Luxury homeowners take great pride in their homes as symbols of their lifestyles and personalities. While these homes are already considered high-end, they are being transformed into more lavish and ultra-comfortable living spaces. In many cases, these affluent homeowners have more than one trophy property for either recreational, entertainment or investment purposes."

Second Homes and the Affluent Go Together

When asked whether they owned or planned to purchase a second home or vacation home in 2005, 27 percent indicated they already owned a second/vacation property, while 17 percent indicated they planned to buy one this year. Of those who already own a second or vacation home, significantly more respondents indicated that their second homes were used for recreation versus investment purposes. Fifty-four percent of homeowners who owned, or planned to own, a second home said it was located within 300 miles of their primary residence. The Coldwell Banker Luxury Index also found that the number of luxury homeowners planning to purchase second or vacation homes grew slightly since August 2004.

"These findings contradict the current notion that the affluent are purchasing second homes purely on speculation," notes Gillespie. "Rather, we have found that those homes are being used as recreational properties, as residences for children in college or for investment."

Luxury Purchases Impervious to Interest Rate Hikes

According to the study, nearly two-thirds (64 percent) of luxury homeowners said recent increases in interest rates will have no impact on their luxury purchases. This compares to 61 percent of luxury homeowners who answered the same way in August 2004 when interest rates were lower. Only 4 percent said that recent interest rate hikes will greatly impact luxury spending, with another 31 percent indicating that they will scale back luxury purchases.

"The Coldwell Banker Luxury Index provides a snapshot of the state of the luxury home market today, as well as wealthy Americans' preferences and attitudes when it comes to their homes," Gillespie continues.

The most popular luxury amenities recently purchased are security systems, gourmet kitchens, topiary/landscaped yards, home theaters, hot tubs and in- ground swimming pools, respectively. These results mirror the August 2004 findings. Also noteworthy is the fact that 16 percent of respondents indicated that their homes are equipped with bedroom kitchens.

When asked what new high-end amenities they plan to put in their homes in 2005, the top responses were:

The 2005 Luxury Index also revealed that the number of luxury homeowners planning to purchase home decorations (35 percent) increased significantly, compared to the August 2004 Index (20 percent).

Disposable Cash: Big Ticket Purchases Planned for 2005

When asked to define the largest purchase they expect to make in 2005, cars topped the list at 17 percent; however, an overwhelming 41 percent of the answers related to the home, with furniture topping that list at 11 percent, followed by home remodeling at 9 percent, among others. In contrast, interest in purchasing boats, yachts, and country club memberships waned compared with August 2004 results.

Budget Living Wealthy Style

Despite the fact that 53 percent of luxury homeowners reported that they are currently on a budget, an investigation into recent lifestyle and behavior patterns reveals a different picture. In fact, in just the past six months, 60 percent of luxury homeowners reported that they had been to a high-end spa or resort; 46 percent have vacationed internationally; 45 percent have flown first class on a commercial airline; 17 percent have flown on private jet; and 11 percent have been on cruise. In addition, in the last six months, 4 percent of luxury homeowners reported having elective cosmetic surgery.

Demographics of Study Respondents

Nearly half (47 percent) of the Coldwell Banker Luxury Index respondents reported an annual household income of $300,000 or more. The largest number of respondents reported a household of four people (27 percent), and a wide range of age groups were represented: under 35 (12 percent); 35-44 (40.9 percent); 45 to 54 (27 percent); 55 to 64 (14 percent); and, 65 plus (5.6 percent).

Methodology

The 2005 Coldwell Banker Luxury Index study was conducted among 300 U.S. luxury homeowners, defined as those owning homes valued at $1 million or more. The research was conducted by International Communications Research (ICR) based in Media, Pa., in March and April 2005 and commissioned by Coldwell Banker Real Estate Corporation on behalf of Coldwell Banker Previews International, a leader in marketing and selling of luxury homes. In 2004, Coldwell Banker Previews International sold $35.5 billion worth of homes valued at $1 million or more.

About Coldwell Banker Previews International

The Coldwell Banker Previews International program has been marketing luxury homes since 1933. This luxury home marketing program has been exclusive to Coldwell Banker affiliates since 1980. The exclusive group of certified Previews Sales Associates make up only six percent of the more than 121,400 Coldwell Banker sales associates worldwide. In February, at its annual International Business Conference in Orlando, Fla., Coldwell Banker unveiled the Web site http://www.coldwellbankerpreviews.com to support its Coldwell Banker Previews International luxury real estate marketing program. The Previews site allows consumers to view more than 10,000 luxury properties. Most of the homes listed are priced at more than $1 million.