When 17-year, luxury real estate agent and expert ILHM instructor Tami Simms saw the recent Business Insider article warning that a decline in luxury real estate sales could be a “recession red flag”, her knee-jerk reaction was, “Not in my market!”
Simms’s market in St. Petersburg, FL and immediate neighboring markets have seen incremental growth and record-breaking sales above $5M since 2016, and colleagues of hers were getting bites on $7M penthouses just weeks prior to seeing the forewarning article.
While she sees no need for major concern overall, she does add that, “Anecdotally, when I talk to agents in other markets, there are a lot of markets experiencing a slow-down. There are certainly pieces of the luxury markets that are a little sluggish, but then there are others that are seeing record-breaking growth.
The Business Insider article claims that all across the US, there is a growing surplus of luxury listings that are languishing on the market for months, and even years. Namely, it mentions that penthouses, luxury ranches, and mega-mansions are available in excess and hints that this is partly due to millennials taking over the market, who find these estates too “labor-intensive”.
The article also touches on the theory that the recent changes in homeowner taxes could be the culprit for declining activity in the higher price range, an issue to which Simms responded that she, nor anyone in her immediate sphere of influence, has encountered thus far.
So is the disinterest in upper-tier listings really because there’s a recession ahead, or is it because there is a growing gap between what today’s high-end client really wants and what agents in the luxury home market continue to assume they want?
The slowdown of high-priced estate purchases aligns with shifting luxury trends
According to our September Luxury Insights Report, today’s luxury buyer values quality over quantity, and is more likely to gravitate towards smaller, urban developments, which Simms has seen in her own market across all age groups—not just millennials.
“The affluent are looking for the most luxurious properties in the right spot so that they’re surrounded by the right lifestyle and environment,” Simms says, which echoes the Institute’s recent findings.
Agents can adapt their luxury home marketing strategy to reflect these trends by placing more focus on a property’s location than the property itself.
As Simms puts it, “They’re not looking for the most expensive properties for the sake of having the most expensive things.”
However, slow-moving megamansions and luxury estates aren’t always the product of misinformed luxury home marketing strategies. Simms interjects, “Historically, it is true that the more expensive properties take much longer to sell and do experience big price adjustments.”
Your luxury home marketing strategy is better informed by your local market than national headlines
Considering the discrepancies between the Business Insider article and the personal accounts of CLHMS certified agents like Simms, it appears that a generalization of the luxury home market does not necessarily provide an accurate representation of its condition.
“To me, those properties that are sellable and that are priced correctly based on what somebody is looking for, they are not languishing on the market and they are not taking dramatic price cuts,” Simms points out.
Though it is important to stay informed about what national and global news is circulating about the luxury home market, Simms advises that luxury real estate agents are better served by staying on top of their local market trends and truly listening to what their clients are telling them.
She also offers that agents benefit from checking in with their market trends often, since markets can experience frequent changes. The Institute’s CLHMS training provides agents with a number of tools to help them adapt to luxury trends and also releases monthly Luxury Insight Reports that give agents a regular snapshot of 60+ luxury markets.
Trainings can also help agents gain a more profound understanding of how to create a successful luxury home marketing strategy, from pricing properties correctly to learning how to consistently provide referral-worthy experiences for their clients.
If you’re ready to distinguish yourself in the luxury home market, you can find out more about our CLHMS Live and Online trainings here.