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The term "luxury" is not regulated by state or federal law, which means anyone can use it in advertising. YvanDube/Getty Images Plus

Is that “luxury” apartment of yours really luxury? 

Janet Nguyen Sep 19, 2024
The term "luxury" is not regulated by state or federal law, which means anyone can use it in advertising. YvanDube/Getty Images Plus

When Andre Chepetan moved to Dallas in 2021, he constantly saw apartment brochures and advertisements that used the term “luxury.” 

But behind the high-end appliances and fancy countertops, the units looked poorly constructed. 

The walls were paper thin, the windows were poorly installed, and the “hardwood” flooring was actually laminate. 

“[Luxury] sounds good and it gives the impression that it’s something that it’s not,” Chepetan said. “It’s all really just marketing.”

There’s been a surge of new apartments in the U.S. that bear the “luxury” label, but the term is not regulated, leaving buyers and renters frustrated over what they see as deceptive marketing. “Luxury” can reveal characteristics about the property’s price and the amenities it offers, but it doesn’t necessarily tell you how well-constructed it is.

“It’s really subjective, because there is no definition set by state or federal law. What can be luxury to one person may not meet the definition of luxury to somebody else,” said Kristen Haseney, an assistant extension professor of real estate at the University of Connecticut. 

So what does go into defining a property as a “luxury” apartment or house?  Realtors and builders are the ones who decide to assign the term “luxury” to a property, and one rule of thumb they usually use is that it’s within the top 5% of property prices within the region, said Tony Mariotti, CEO of RubyHome Luxury Real Estate. 

But it depends on the area. Take a city like Los Angeles, which has some of the most expensive homes and apartments in the nation. A $4 million home would still be considered “luxury” because of its high price tag even though it isn’t within the top 5%, Mariotti said. 

There are other criteria realtors also use. When it comes to apartments, if you build a new complex and it’s comparatively more expensive and nicer than the surrounding apartments, then realtors would use that moniker, Mariotti said. “Nicer” could mean it’s a high rise; it has better finishes on its counters, cabinets and flooring; and it has better amenities, such as a rooftop pool and a gym with great equipment, Mariotti explained.

If you’re building $4,000-a-month apartments in Hollywood, you would market them using the term “luxury” if the surrounding apartments cost $2,500 a month, Mariotti said. 

Sometimes, the word “luxury” is used to sell a lifestyle. Look at the Residences at W Hollywood, a condo building in Los Angeles. Mariotti said the units themselves are relatively cheap for the area, at about $600,000 or $700,000. But it’s not the unit that’s considered luxurious, it’s the building, he explained. 

“You’re in the W, so you have access to all of the hotel services, like the pool, concierge, housekeeping, etc.,” Mariotti said. “It’s a lifestyle at that point. You’re in the heart of Hollywood.”

As for signs that the word “luxury” is being used too loosely? “Bad location, bad aesthetics, bad finishes inside the units,” Mariotti said. 

Without regulation, agents can bandy around the term. Shane Phillips, a housing affordability researcher, agrees with critics that the term “luxury” is overused. 

“This is probably a case of linguistic inflation, where words start to lose some of their meaning or their force over time,” said Phillips, who’s the housing initiative project manager at UCLA’s Lewis Center for Regional Policy Studies. 

But trying to regulate the term would be difficult, because everyone would have to agree on how to define “luxury,” said Anthony Orlando, an associate professor of finance, real estate and law at California State Polytechnic University, Pomona. 

Orlando said he thinks the best approach would be to educate buyers about the different meanings behind real estate marketing terms so they aren’t fooled by them. It doesn’t end at “luxury.” Realtors also use, for example, “newly renovated.” 

“You have to beware, because nowadays a lot of renovations are done cheaply, and it might actually have worsened the property in some ways,” Orlando said. 

Or sometimes realtors will use the term “historic” to describe a property, but that can come with needed repairs and maintenance, Orlando added. 

While experts say “luxury” is overused, they also think consumers are savvy enough to figure out when a realtor is overhyping a property. 

“People know what’s luxurious and what’s not, and they can see for themselves with apartment units,” Phillips said. “Something I can’t judge for myself is how structurally sound a building is or whether the plumbing was connected properly.” 

Andre Chepetan ended up finding a place in uptown Dallas that was not advertised as a “luxury” apartment, but it had real hardwood floors, thick windows and soundproof walls.

He now lives in Rio Rancho, New Mexico, and applied the lessons from his Dallas experience to apartment hunting there. Chepetan said he found a plain complex with a dishwasher that’s probably older than him, but the important thing is it works well. 

Because of linguistic inflation, “luxury” has lost its value with Chepetan, to the point that he won’t consider buildings with that label. 

“I avoid luxury apartments at all costs,” he said. “They’re gonna have to rebrand.”

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