503-785-3485
bill@conerlyconsulting.com
  • Facebook
  • Twitter
  • Linkedin
Conerly Consulting Conerly Consulting
  • Consulting
    • Approach/Philosophy
    • Sounding Board
    • Economics and Business Strategy
    • Assessment
    • Case Studies
    • Testimonials
  • Speaking
    • The Package
    • Topics
    • Testimonials
  • Writing
    • Businomics Newsletter
    • Businomics
    • The Flexible Stance
    • Blog
  • Industries
    • Banking/Finance
    • Manufacturing
    • Other Industries
  • Video
    • Speaking
    • Event Promotion
    • Business Planning
  • About
    • News Coverage
  • Contact
  • Consulting
    • Approach/Philosophy
    • Sounding Board
    • Economics and Business Strategy
    • Assessment
    • Case Studies
    • Testimonials
  • Speaking
    • The Package
    • Topics
    • Testimonials
  • Writing
    • Businomics Newsletter
    • Businomics
    • The Flexible Stance
    • Blog
  • Industries
    • Banking/Finance
    • Manufacturing
    • Other Industries
  • Video
    • Speaking
    • Event Promotion
    • Business Planning
  • About
    • News Coverage
  • Contact
  • Home
  • Economy
  • Income Distribution and Luxury Goods

Economy

07 Jul 2007

Income Distribution and Luxury Goods

  • By Bill Conerly
  • In Economy
  • 1 comment

Here’s an important idea if you buy or sell luxury goods:  The “only-the-best” economy.  Just got back from a week in Aspen, Colorado, which may be the most expensive ski resort in the country.  (A couple of years ago Forbes Magazine had a list of the most expensive ski homes in the country, and it was heavily dominated by Aspen.)  Naturally, the talk in the bar turned to real estate prices, and how “absurdly” high they were in Aspen.

But whether Aspen prices are absurd depends on the future.  If you buy a house or a condo today and put it in the rental market, your cash return will be tiny.  (Tiny if you’re all equity; negative if you have to finance your purchase.)  The point of buying is betting on the future, not current income.

For a top-drawer location in a top-drawer resort town, the price outlook depends on the income at the highest level of the income distribution.  That’s because the top properties are far, far overpriced compared to next-to-top properties.  Imagine this:  you have been visiting a second-tier location in a second-tier resort.  Your overall experience would be maybe 10 percent better at a top location at the top resort.  How much more will you pay for a slightly better experience?

Before answering the question, suppose that you’ve just made $100 million as a Web 2.0 entrepreneur or as a corporate CEO.  You’ve got far more money than you’ll ever spend yourself, and your children already have far more money than you think is good for them.  So anything you have left over when you die will go to charity.  Now answer the question:  how much more will you pay for a slightly better experience?  Well, whatever it takes.  So million-dollar homes become ten-million-dollar homes.

How long will this trend continue?  It depends on how long rapid income growth at the top of the income distribution continues.  I’ll be talking about this in the July issue of the Businomics Audio Magazine, when I discuss the business implications of the change in income distribution.

  • Share:
Bill Conerly

    Comments

  1. Ski House Rental
    July 10, 2007

    Ski House Rental

Comments are closed.

Search

Sign Up For Our Newsletter!

View Latest Issue

RSS Bill’s Forbes Articles

  • Inflation Has Not Shown Up Yet, But It’s Coming February 25, 2021
    Inflation is muted, but not for long. Inflation is coming in the next two years, then will be followed by a boom/bust business cycle, or maybe two.

Testimonials

The ratings you received from our banker evaluations were among the highest I’ve seen, which matched my impressions exactly. Your presentation style is quite engaging, you bring interesting and valuable content, and our ability to interact in a stimulating way during “Q&A” sessions makes you a valuable addition to any meeting agenda. As a bonus, you are a genuinely enjoyable participant in conference activities beyond your presentation.
Steve Yeakel, Montana Independent Bankers
Bill was a great resource in helping us develop our business model and has continued to be a great advisor as we have refined it and successfully entered the marketplace.
John Courtney, CEO, NextJob, Inc.
Thank you for a wonderful presentation. Everyone who heard your presentation was impressed with your analysis, and strong command of facts and theory. More importantly, your ability to weave together substance with humor, in a very dynamic way, meant our attendees learned and retained more information than we would have typically expected. You made economics fun and you left our members with powerful insights on trends and issues to consider as they prepare for the future.
John Aguirre, Oregon Association of Nurseries
Bill’s presentation was neatly balanced…rich with content.. and our audience really enjoyed his humor.
Bing Sheldon, SERA Architects
We asked Bill Conerly to look at one of the major factors limiting the growth of our business. He pulled together data from a wide range of sources, as well as his own extensive business knowledge, to give us an insight into when conditions would improve and how we could be ready to capitalize on better times. He did so in a straight forward, easy to understand manner. A year later it was clear that things had evolved just as he had forecast. Ever since then he’s been my go-to guy on how the e…
Len Ludwig, former CEO, Vencore Capital LLC
You are a master at your craft and a favorite of our audience.
Jim Parker, UBS Financial Services
Bill is a delight and easy to work with. The client thought he was great and delivered value to their group. I would definitely recommend Bill.
Andrea Gold, Gold Stars Speakers Bureau
Every time you spoke, we got business.
Chris Rasmussen, Washington Trust Bank, Bank of the Northwest
Bill Conerly has been an invaluable resource to our executive team and ownership by delivering superior, well-founded ideas that are critical to navigating the current economic climate within the construction industry. Bill assisted O.B. Williams Company with developing a strong business plan that we implemented 18 months ago. As a result and together with Bill, we are improving our position within our highly competitive market segment. We understand that navigating this current economy is indee…
David Wick, CEO, O.B. Williams Company
You made a complicated global picture understandable. I have received many favorable comments from those in attendance. I frequently heard comments like ‘Now I understand’ or ‘Wow, now I get it’ and ‘He was great to listen to. Thanks for bringing Bill to our meeting.’
Pete Van Sickle, Idaho Department of Lands

Get in touch

(503) 785-3485

bill@conerlyconsulting.com

PO Box 2188
Lake Oswego, OR 97035

Useful Links

  • Consulting
  • Speaking
  • Videos
  • Blog
  • Press
  • Contact

Social Links

  • Facebook
  • Twitter
  • Linkedin

Newsletters

Copyright 2020 Conerly Consulting LLC