While studies in consumer behavior research examine the impact of status or conspicuous consumption on pricing, there is little research on the perception of luxury on real estate pricing. Using a sample of closed residential property sales in South Florida from 2005 to 2021, housing price drivers for non-luxury and luxury housing are investigated. We investigate whether the housing characteristics valued in high-end luxury properties differ from non-luxury properties. Results for single-family properties show that the markets are distinct and independent and that value in the luxury segment is influenced to a large extent by an intangible residual factor associated with location, while the non-luxury segment value is driven by more traditional tangible housing structural characteristics such as living area size, number of bedrooms, baths, etc. We replicate the analyses using a subsample of non-single-family residences and find that these results hold for the condominiums. The research adds to the literature on the growing luxury real estate market and highlights that the value proposition for luxury properties is distinct. The value characteristics differ and are more difficult to quantify as compared with factors that impact non-luxury housing.
