Lux agents are reporting record earnings while lux properties have become a larger and growing share of the overall 2021 market.
Pandemic Inspired “Great Reshuffling” of Housing Market
Zillow dubbed consumer demands for more land caused by the onslaught of the coronavirus pandemic the “great reshuffling.” Urbanites wanted “out” of city centers and “in” to suburbs either “next door” or in other states for more in-home space. Urbanites also wanted cheaper home prices. Suburbanites sought out rural places to live for even more land and even cheaper prices.
Industry experts say this “great reshuffling” has changed real estate at every price point. These experts say that no segment of the housing market has been more affected by the “great reshuffling” more than the luxury sector.
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Different Markets Now Spell Luxury
For years and years, New York City and San Francisco have been the king and queen of luxury-dense markets in this county. Now that consumers have continue reshuffling, the king and queen of luxury markets have been dethroned. States like Idaho and Wyoming and Texas have assumed the latest crowns of luxury destinations.
According to Michael Altneu, vice president of Coldwell Banker Global Luxury, “The luxury sector continues to outperform itself.”
Thanks primarily to work-from-home options, many consumers willing and able to consider luxury homes are searching for properties and locations that can enhance their health and lifestyle. Altneu said, “Health is the newest amenity.”
Altneu defined the specifics of this health amenity as Zoom rooms designed for top-of-the-line video conferencing, integrated smart home tech, home gyms and theaters, etc. And, according to Altneu, “They want it all and they don’t want it all with one house. They want it with multiple (beachfront, equestrian, skiing, etc.) properties.”
Share of Homes in Luxury Price Range Has Skyrocketed
Gay Cororaton, a senior economist with the National Association of REALTORS® (NAR), found that the share of homes with a price tag of more than $1M jumped from 1.8% in 2012 to 6.61% in 2021.
More interestingly, Cororaton found that over the last year, in both 2019 and 2020, the overall share of homes with price tags over $1M was 3.48%. Now, nearly double the share of luxury homes sold, 6.61%, have price tags over +$1M!
Cororaton said, “The data shows that there has been an increasing share of homes in the upper end of the market.” In Cororaton’s o[inion, “The whole market is shifting upwards because of lack of supply.”
Envisioning Demand in Luxury Markets in 2022?
Altneu said, “None of us see many signs of (this surge in luxury demand) slowing down. I do not anticipate that we’re going to see these things disappear.”
Additionally, Altneu and others believe that areas that have struggled during the pandemic (areas such as the former king and queen of luxury, New York City and San Francisco) will rebound. “I anticipate we’re going to see a greater resurgence in places that are more dense,” Altneu said. “People may have missed that culture for some time.”
Michael Nourmand, president of Nourmand and Associates, believes that many Californians who moved to cheaper, more tax friendly states such as Florida and Texas will be returning to California’s costly coastal markets… I think 2022 will be another banner year.”
Luciane Serifovic, a Manhattan-based luxury agent and NAR’s Cororaton agree that the end of international travel restrictions could well unleash massive international luxury demand in 2022.
Overall, international buyers account for 10% of all home sales costing $1M or more though they only account for 2% of all national home sales. In certain luxury markets, international buyers account for +15% of all lux sales.
Serifovic said, “I definitely believe the pent-up demand will come once the borders open up.”
Thanks to Inman.