Written by JIM DALRYMPLE II
Market so far in 2021
“The luxury sector continues to outpace itself,” said his company. Genblue event said. “That’s extraordinary.”
Altneu said the luxury market generally continues to thrive, thanks to the widespread choice to work at home. Many have benefited the type of consumers who are considering housing in the luxury segment. And as a result, those consumers are looking for more traits that can improve their lifestyle and their health.
“Health is the latest amenity,” Altneu added.
The rise of home offices has been widely debated over the past year and a half, and Altneu states that it is one of the features luxury homebuyers want. However, he also said that popular facilities include home gyms and theaters. Zoom room specially configured and integrated for video conferencing smart home technology. And in the end, the buyer at the highest end of the spectrum simply “wants everything,” he said.
“They want a home with horse riding characteristics,” Altneu explained. “They want it on the beach. They want it all, not just in one house. They want it in multiple properties.”
Beyond the wide stroke of consumer taste, it can be difficult to pinpoint what is happening in a luxury space, as there is no clear and quick definition of what defines luxury. A $100 million home in Beverly Hills is clearly a luxury, but what about a nearby condo that costs $1 million? Or is it a $600,000 home in Idaho or Texas?
To bring order to the turmoil, Inman spoke with Gay Cororaton, a senior economist at the National Association of Real Estate Agents (NAR). Cororaton looked at homes that sold for over $1 million. And she found something interesting. The share of homes in this price range jumped from just 1.8% in 2012 to 6.61% in 2021.
More interestingly, much of that increase occurred only last year. In both 2019 and 2020, the overall share of homes over $1 million was only 3.48 percent. This is almost half of 2021.
“The data shows that housing share is increasing at the top of the market,” said Colorado.
According to Cororaton, “the entire market is shifting upwards due to supply shortages.”
Although selected by Cororaton, it’s happening in much of the United States, especially in the west. And she said part of what was happening was an increase in demand for larger homes, often in the suburbs, partly caused by a pandemic.
For clarity, $1 million will buy something different from Phoenix than in Park City, Utah.
But these numbers show that the high end of the market seems to be on track. Overall, the data show that the United States has a desire for expensive real estate, even if relatively pedestrian homes in expensive areas are pushed into the $1 million segments. Altneu is right that this sector is outperforming overall.
Case study: New York City
Inman’s list of top luxury sales to date in 2021 includes three properties in New York City, but Manhattan-based luxury agent Lucian Serifovich has capped her region’s price range. Some real estate, especially some buyers, fled the city during a pandemic. The market could have fallen 12 to 15 percent compared to before the pandemic, according to Serifovich.
On the other hand, recent contract activity has actually increased compared to last year.
Her claim was that the New York luxury market could have been hit a bit, though probably not as serious as widely assumed.
“Looking at everything and the big picture, it’s not as affected as I expected,” she added.
Serifovich has also compiled several reports for Inman that provide snapshots of the Manhattan condo market for prices ranging from $5 million to $10 million. According to the report, pending sales for that segment plummeted in the summer of 2020. However, from September to July of this year, pending sales for that segment surged. It then fell again but remains higher than at any point between 2011 and 2020.
According to another report provided by Serifovich, the supply of mid-upper-end condos is currently on the rise in Manhattan, but has fallen from levels recorded last fall and is a pandemic.
The price per square foot of such a condo in September 2021 was $2,191 — down 11.8% year-on-year but increased 2.6. Compared to 1 month ago.
The point of all this is that the Manhattan luxury market seems to be experiencing some seasonality and pandemic resistance, but overall it seems to be growing at this point.
Case study: Los Angeles
What will the luxury of 2022 look like?
“None of us sees many signs that it slows down,” he said. “I don’t think I’ll see these things disappear.”
Altneu also speculated that some areas that had some difficulty during the pandemic could be revived. For example, in 2022, urban areas could be more attractive in two years.
“We expect to see a greater resurgence in denser areas,” said Altneu. “People may have missed the culture for some time.”
Another trend that could shape the luxury market in 2022 is the return of people to the expensive coastal market. Nourmand said many people who moved from places like California to cheaper states like Texas and Florida may begin to crave their first hunt. They may find that the new location does not have the same network of family and friends. Or you may simply miss the culture and the weather.
“I think you’ll see many of those people coming back,” he said. “and I think 2022 will be another flag year.”
Another major upcoming trend in luxury mentioned by almost everyone was the resurgence of foreign buyers. During the coronavirus pandemic process, travel restrictions made it difficult, and in some cases impossible, for foreign buyers to visit the United States. Some have responded by buying an invisible home, but experts who spoke with Inman believe that the end of the travel ban could unleash a flood of international demand.
While only 2% of home sales in the country are for overseas buyers, in some markets (such as certain areas of Florida), foreigners make up 15% of buyers.
“In those places, I think they move the needle,” Cororaton added.
Serifovich agreed. She had already worked with several international buyers during the pandemic and recalled one case where a Canadian client struggled to cross the border. Serifovich was generally optimistic around 2022 but said the luxury market should gain even more momentum when foreign real estate consumers no longer have to jump over such hoops.
“I definitely believe,” she concludes.