Key Highlights
- Driving trends for lux housing include low interest rates, strong financial markets, remote working and COVID vaccines
- Cities with single-family housing stock on large lots predicted to have strong year
- Cities covered in Part I include Miami, New York and San Francisco
The COVID-19 pandemic has shifted consumer preferences towards larger homes, more in-home amenities to serve remote working and learning and more flexible space both within and outside a home’s boundary.
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These preferences call out for larger lots sizes available in suburban and rural areas and in cities such as Los Angeles, greater Miami and Sydney. These preferences also call out for luxury buyers able to afford larger homes on larger lots who are able to take advantage of the preventative safety that remote working and learning options offer.
The bottom line for luxury housing markets in 2021 boils down to robust sales fueled by continuing low interest rates and a stock market that investors describe as “the best.”
Realtor.com senior economist George Ratiu said that the “wealth effect” will drive “upper end of the consumer market.”
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Here are some luxury global housing markets that will benefit:
Miami
Look to the luxury markets in Miami, Fort Lauderdale and Palm Beach to continue to flourish as they have throughout 2020 with highly charged pandemic migrations from highly-taxed Northeastern and Western states. (Florida offers its residents both great weather and no personal income tax benefits.)
Million dollar-plus single-family homes sales in Miami Dade County were up +54% from 2019 in November 2020 and in Palm Beach County, +$1M single-family home sales tripled during this same time period, according to data from Miller Samuel and Douglas Elliman.
With scant lux single-family inventory in Southern Florida, Miami’s abundance of large, amenity filled condominiums will most likely Northeastern and Latin American buyers as foreign travel reopens in the second half of 2021.
New York
Well-organized, efficient and widespread distribution of the COVID vaccine is fundamental to New York’s housing market. Currently, Manhattan’s luxury market is essentially on sale for dedicated New Yorkers who are committed to remaining New Yorkers. Frederick Warburg Peters, CEO of Warburg Realty said, “…terraced apartments, apartment with alcoves or small rooms that can become offices, and townhouses all attract attention…” More defined kitchen spaces, living rooms and private or at least shared outdoor space are also expected to be longer-term demands.
San Francisco
San Francisco, like New York, has seen its luxury home sales drop to just 6% y/y as many affluent buyers have migrated to Marin County, San Jose County, Monterey County and Lake Tahoe for more space.
Santa Clara and San Jose Counties
Silicon Valley’s Santa Clara and San Jose Counties as well as the East Bay’s Contra Costa County could become the new San Francisco in 2021. Luxury sales in Contra Costa County increased +70% from May through October 2020 compared to the same time period in 2019 and realtor.com is predicting that San Jose-Santa Clara Counties will be among the strongest luxury housing markets nationwide in 2021 with both sales volume and prices increasing some +11% over the next 12 months.
Thanks to MansionGlobal.
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