- Expect competition but good returns in French Alps, Hawaii and San Francisco
- Buyers looking for lifestyle investments
Brokers Anticipating Busy Spring and Summer Seasons
Real estate markets are reawakening worldwide as travel restrictions ease globally. According to a recent report from Zillow,70% of homeowners said they would be comfortable moving to a different home once vaccine distribution becomes widespread worldwide.
French Alps Experiencing High Uptick in Demand
Laetitia Hodson, associate partner with Knight Frank in the French Alps and Provence, said, “We’ve noticed an increase in inquiries, viewings and transactions across all the resort towns from buyers interested in investing. People are looking for a lifestyle investment, and wellbeing is very important.”
Prices in the French Alps have risen +1.2% y/y, according to the Knight Frank Index. This increase is due, in part, to low inventory as owners in Alps resort towns either didn’t list or took their properties off the market during pandemic lockdowns.
Currently, most buyers in the Alps resort towns are domestic and those from neighboring countries but once France completely reopens and international travel resumes, pent-up demand will take over.
Hodson believes Chamonix and Megeve may be the bigger draws in the Alps due to the fact that “…in those resorts you could rent out properties not just in the winter but also in the summer. The dual season should make those markets even more attractive in the months to come.”
High Demand Continues in Hawai
“Demand started in earnest (last) summer and led to crisis-level low inventory,” said Matt Beall, principal broker with Hawaii Life. “The high end is definitely a lot fatter in terms of volume, but this is impacting every segment of the market with no signs of slowing. The vaccine and reopening of international travel will bring in the next phase of this.”
Sellers and agents alike are looking forward to seeing buyers from Japan and Canada, historically the biggest sources of foreign demand, in the coming months.
Beall said high-end vacation rentals are “almost completely sold out already.” Continuing, Beall said, “…now with travel slowly opening, more people are considering buying. If rental demand and booking are any indications (e.g. Airbnb’s begging for more hosts as its demand is through the roof), the frenetic demand is only going to go up.
Buyers Ready to Return to Urban Living in San Francisco and New York
San Francisco and New York City were the two hardest hit urban centers in the country by the COVID pandemic. People couldn’t get out of those most expensive, dense housing markets fast enough. Now, both cities have seen a boost in Q1 2021.
Jeff Samuels, the Northern California regional manager with The Agency, said, “Sales of luxury condos at $2M and above were up by +175 in February, compared to the previous (pre-pandemic) year. “We’re already seeing…(people) starting to feel comfortable with a return to normalcy.”
Samuels continued. “People are longing to return to an urban lifestyle. They might not be going back to the office every day, but they don’t want to be two hours away.”
Advice to Buyers
With inventory being tight and interest rates remaining low, buyers ought to expect competition. Beal said, “If you don’t want to be in a bidding war, you don’t want to buy. Be aggressive and get as much background work done as you can (because) you’re going to be competing no matter what.”
Hodson said that some 90% of her buyers are looking to rent out their properties. Therefore, she said that properties with the greatest ROI results will be properties that appeal to vacationers for multiple seasons, that are close to airports, and that have the most reliable, consistent Wi-Fi.
Samuel encourages buyers to think down the road a year or two. Instead of not wanting to share space with people, buyers are now and will be wanting to “…be near the city again. If I’m a buyer (in top urban metros), I’m thinking this is the right time for me. There’s been a downward pressure on prices, and interest rates are still historically favorable.”
All three of these professionals believe competition among buyers will only intensify in the coming months. “Don’t get dismayed by the frothiness of the market, because there’s still a ways to go,” said Beall. “There’s a lot of staying power in the recent wave of buying, and I don’t think we’re out of it yet.”
Thanks to MansionGlobal.
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