They're popping up all around the Twin Cities: Atop the hills of Medina; along Lake Minnetonka's shoreline; facing the Minneapolis skyline from its hills and lakes, and along the Mississippi River. And, of course, in Edina, the original exclusive suburb.
Big, fabulous houses. Houses with walls of windows, acres of landscaped yards, kitchens to die for. Million-dollar houses, multimillion dollar houses. Rare in the Twin Cities 25 years ago, now they're all over. Where do they come from? Who buys them?
As recently as five years ago, million-dollar home sales were a rarity in the Twin Cities market. Today, there are more than 300 for sale, maybe more -- the 300 are just those listed through a Realtor...
A combination of skyrocketing land costs and soaring labor expenses has dovetailed with an insatiable appetite for luxury and the richest generation the United States has ever seen. As an estimated $2 trillion to $11 trillion dollars moves from one generation to the next in inherited wealth, baby boomers are looking for a place to sink their new-found riches. ....
"Why not live in your bank?" asked Minneapolis architect Garth Rockcastle, and some boomers are. Many are expressing an increasing willingness to invest a greater share of their wealth in real estate.
"We're looking at a period of prosperous times," said Tom Jones, a real estate agent with 25 years' experience in upper-end homes. "In the last five or six years, more people are interested in spending significant amounts of money to restore or enhance old classic houses or to build new residences at that same structure and construction level."....
That's no longer true. Thanks in large part to a healthy economy and the lowest mortgage interest rates in history, more than 75 percent of the households in Minnesota own their homes.
Many who buy million-dollar houses are immune to interest rates -- they often pay cash -- low rates combined with rising income have caused an incredible surge in demand for all housing during the past decade....
Baby boomers -- those born between 1946 and 1964 -- comprise the largest sustained population growth in the history of the United States. And they're now in their peak earning -- and spending -- years...
According to the Minneapolis Area Association of Realtors, during the past year 182 houses sold for more than $1 million. That doesn't include new houses and those not listed through the Regional Multiple Listing Service. Five years ago there were only 59 and a decade ago only 25 (adjusted for inflation)....
This is an interesting article. The Bush Estate Tax repeal will accelerate a dynamic of wealth concentration that seems to have picked up in the 1970s and has been driven by the 20th century economic boom, the lifespans of those born between 1920 and 1940, and the unprecedented expansion of "winner take all" economic marketplaces. [1]
What will our society look like in 20 years? Will it look like the egalitarian mythos of 20th century America, or more like post-industrial England? I'm betting on a powerful and ascendant aristocracy, with a lot of openings for governesses, chefs, groundskeepers, athletic trainers, tutors, travel aides, butlers, etc.
Well, tutoring the gen-elite children of a the aristocracy will probably pay better than bagging groceries (which will be done by robots anyway ....).
john
[1] Winner take all economics has been a popular research domain in the past 20 years. It applies to CEOs, sports superstars, ace programmers, and in many other domains. I think most economists expect network effects to continue to amplify this trend.
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