We’re halfway through 2019, so what better time than to look at how some of the market predictions made at the beginning of the year are faring in this month’s Luxury Market Report.
While this report seeks to give an overall view of the luxury market and concurs that luxury real estate is firmly entering into a year of changing demand, it is still important to recognize that individual markets must be viewed separately too – certainly one of the most significant observations is that there are many markets in the ‘change’ process and the trends described above are causing a variety of influences that are often in contradiction to current expectations.
Prediction #1: Government regulations will negatively impact the market.
FALSE: In late 2018, many were predicting that government regulations along with tax increases, would negatively impact the high-end housing market. However, the reality is that so far in 2019, government regulations have not had the largest impact on the luxury market in either the U.S. or Canada. Instead, the greater influence has been the impact of global uncertainty, changes in purchasing decisions, and relocations to avoid high local taxes that have caused the most significant changes in spending habits and location desirability.
Prediction #2: Demand for luxury condos will increase.
TRUE: Luxury condominiums have proven to be one of the strongest sectors in today’s luxury market. Early predictions of steady demand in most markets, with downtown cores showing the strongest growth, have proven to be correct. The combination of young professionals looking for live-work-play lifestyles, global entrepreneurs using wealth from their businesses, and baby boomers leveraging equity from their single-family residences to purchase luxurious full amenity condos are the main drivers in this market.
Prediction #3: Higher square footage equals higher price tag.
FALSE: While large palatial homes are still in demand, it’s not to the extent that meets the new ultra-wealthy’s criteria for numerous homes that offer ‘smart’ technology and design. These homeowners still want homes that offer plenty of space, privacy, and protection, but with today’s technology, this can be achieved in homes half the size. Instead, features such as smart home automation, unique designs, and custom spaces are achieving extraordinary price tags.