As more buyers continue to identify their changing needs this year, some are turning to the upscale housing sector for more space or finer features. In their most recent Luxury Market Report, the Institute for Luxury Home Marketing (ILHM) shared:
“In a snapshot of 2020, despite the devasting effects of the coronavirus pandemic, the luxury real estate market has seen one of its strongest years since 2008. In comparison to experts’ predictions in early 2020, it is remarkable how significant demands for property type, location, and amenity preferences have changed amid the pandemic.”
With more opportunities to work from home and a growing interest in having extra space for things like virtual school, home gyms, and cooking more meals, the desire to own a home that can meet these needs continues to increase. Additionally, record-low mortgage rates are creating opportunities for homebuyers to stretch their legs into higher price points or even expand their real estate portfolios. The ILHM report continues to say:
“Experts believe that the demand for exclusive residential properties outside the metropolitan areas will continue well into 2021; even with the introduction of vaccines, the pandemic is far from over.
For those who have moved to the suburbs and beyond, moving back to the city full time is unlikely while the work from home trend remains. Many of these affluent homeowners are now making their secondary properties their primary residences for the foreseeable future.”
For clients interested in purchasing this year, it appears that some higher-priced markets may have more homes to choose from than those at lower price points. Javier Vivas, Director of Economic Research at realtor.com, notes:
“Interestingly, markets, where new supply is improving the fastest, tend to be higher priced than those that have yet to see improvement, suggesting sellers are more active in the more expensive markets.”
While rising prices are suspected to stabilize over the course of the year, few markets are showing significant declines. Until inventory begins to substantially increase, sellers will also be able to continue setting prices and expanding the breadth of properties inching into the luxury price range. As a snapshot and per the previously mentioned Luxury Market Report, from November 2020 to December 2020, there were 2,200 fewer listings added to the market but an increase of 985 closings.
If you work in a luxury market or with high-end buyers, use these reports to illuminate that there is a light at the end of the tunnel. Some markets, though slight, are beginning to see an increase in inventory (but with increased prices, too). Keep an eye on what decisions major employers in your region are making in regards to work from home policies, as these may dictate a client’s willingness to relocate or enter the market.