Has the pandemic already shifted the geographic trends in the luxury home market?
The May Luxury Market Report reflects some of the immediate changes in trends agents are seeing in the high-end housing market, begging the question of whether or not these changes will sustain once lockdown requirements are lifted.
While we wait to find out, one thing is already clear: the high-end housing market’s response to this crisis is different from previous crises.
During the U.S. 2008 recession, both traditional and luxury housing markets experienced turbulence. This period of uncertainty, however, hasn’t made much of a dent in buyer or seller confidence in the high-end housing market. Though inventory did drop, predictions estimated a much higher 30-40% decrease in inventory. Of course, in more densely populated U.S. markets where reported cases of illness are high, we see a bit more pause in luxury buying and selling than other areas.
To get a more accurate pulse on how the last 30 days affected agents in the field, the Institute spoke with four real estate brand leaders to get a better understanding of the current situation in the luxury market from their agents’ perspective.
Those leaders include:
Craig Hogan, Vice President of Coldwell Banker Global Luxury
Anne Miller, Vice President of Luxury and Commercial at REMAX LLC
Mike Miedler, President and CEO of Century 21 Real Estate LLC
Kuba Jewgieniew, Found and CEO of Realty One Group
We reviewed the statistical data about inventory, sales, and prices, to understand why there has been a relative stability in the high-end housing market as well as any expectations for the upcoming months.
Median Sale Price Is Soaring
Though new listings and sales are down to the tune of thousands, the median sale price has jumped $43,000 over the last 30 days, with the highest prices seen in Los Angeles Beach Cities, Vancouver, Mountain Cities, and San Francisco.
This jump in price aligns with a greater desire for beachfront and mountain properties as the affluent look for easier access to open, natural spaces to cope with quarantine limitations.
Larger Properties in the High-End Housing Market Are Attracting More Interest
Over the last year, we’ve seen the affluent ride a stark shift from interest in McMansions and larger properties to luxury condo living. While they’re still interested in these smaller properties long-term for the sake of minimal upkeep and flexibility, working luxury agents are also seeing some affluent circles invest in larger properties in the high-end housing market. This rising trend could simply be a temporary response to compensate for local restrictions due to the pandemic.
These larger properties afford them extra space for amenities like a home office, yoga studio, or just some extra space while the entire family stays safer at home. However, even those staying in the luxury condo or townhome space are seeking units with an extra room or two to create additional at-home work and relaxation spaces.
Lifelong City Dwellers Are Moving to Suburban Areas
Another notable shift? Lifelong city dwellers in densely populated areas most hit by the pandemic are migrating towards the nearest suburbs.
With the rise of entrepreneurship and remote workspaces in response to our current situation, the affluent are becoming more discerning about their permanent residences. Without the need to commute, big, dense cities are less desirable—especially with an uptick in reported illness in those areas.
Clients Need Your Luxury Real Estate Expertise Now More Than Ever
This month’s report concludes with a succinct statement from Mielder of Century 21 Real Estate, saying, “The truth is, our industry has seen its ups and downs, from housing books to devastating recessions, and we’ve come through stronger every time. Yes, some consumers are scared right now, but the market will eventually return and grow, especially the luxury market. What clients need, now more than ever, are knowledgeable professionals who can guide them through this time, overcome its unique challenges, and help them make the best decision for their families.”
STAY CONNECTED PROFESSIONALLY
We’re staying committed to your professional growth in a number of ways during this time. Here are a few of our best resources to help you continue growing your skills and your practice from home:
Luxury Livestream – Luxury Livestream will replace our Luxury Live Events, and still qualify agents for their Certified Luxury Home Marketing Specialist designation and its exclusive benefits.
Building Relationships Within Affluent Circles – This one-of-a-kind training is for Institute members only and helps agents master the art of relationship building with affluent clientele. All current CLHMS designees can access this course in their membership portal.
Estate of Mind Podcast – The Institute has taken some of its best members-only trainings, instructors, and other guests to bring you into the most important conversations happening in luxury real estate right now. You can access these for FREE on any podcast platform or The Institute’s Youtube channel.