How is the Luxury Real Estate Market Affected By Overall Trends?

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As you may be aware, the luxury real estate market is a different animal altogether when compared to the more “mainstream” housing markets. Whether you’re currently in the market for luxury property or you’re in the business of selling it, it’s important to stay up to date on the latest trends and news affecting this exclusive sector. In this blog post, we’ll take a look at how global economic conditions are impacting luxury buyers and sellers in the U.S. Real Estate and Canada real estate markets. So without further ado, let’s get right to it!

The current state of the luxury real estate market

As seasonal trends go, it’s usually expected for there to be an uptick in new real estate listings just after the first of the new year. The market didn’t take off in January 2021 like it normally does and by spring 2021, it was evident that inventory wasn’t going to peak as expected. This led the real estate industry into a free-for-all as the supply could not keep up with the demand and prices soared. The luxury market started to calm down by July, but the overall sales prices continued to exceed inventory, which trended through December 2021, with some markets having less than 50 to even 70% of inventory in stock compared to the end of 2020!

So how does this affect the luxury real estate market? Over the past couple of years, the median price of homes in the top 10% of the markets in Canada and the U.S. has increased by nearly 15-25%, depending on whether they’re attached or detached homes. Even though this is luxury real estate, at some point, affluent buyers will object to the rising costs and question if buying for top dollar is a good investment. Luxury buyers don’t look at a property for necessities. They’re more interested in alluring qualities that will yield a good ROI.

There could be more inventory available as 2022 continues. Sellers recognize they are at the max return on investment and want to cash in, plus more new-builds become available with supply lines easing up, allowing for builders and developers to finish projects.

How global economic trends are affecting the market

The pandemic brought on relocation trends and affluent buyers were at the forefront of this surge. They didn’t want their lifestyle to be hindered, so they sought more rural areas like Banff, AB that offered opportunities. Oftentimes, they moved their businesses with them too.

There has also been a lifestyle shift with more people working from home and the implementation of flexi-hours that afforded the opportunity for people to move and even own a second home because they could essentially work from anywhere. They can now experience multiple styles of living with a second home. For example: beach, mountain, lake, countryside, and city. That’s why properties like the top luxury real estate in Newport Beach are in demand.

The luxury real estate market continues to strengthen as the number of new affluent buyers enter the market. They’ve made their earnings from things like crypto-currencies and want to diversify their portfolio by investing in real estate properties.

Changes in consumer behaviour and preferences

It is common knowledge that luxury, and, more specifically, ultra-luxury buyers expect the top amenities wherever they purchase. Most people value their home as their best asset and use it as a place to enjoy, making full outdoor kitchens a newer must-have feature for their luxury real estate purchase. Other top amenities affluent buyers look for in luxury real estate are fully-loaded home gyms with saunas, home theatres with the latest technology, swimming pools, multi-generational housing options like a mother-in-law’s suite or a garage apartment, panic rooms, and even in-home medical suites.

It’s not just what the actual luxury property has to offer, but the surrounding amenities as well. Golf, horses, fishing, and skiing are a few things luxury real estate buyers are looking for when they are in the market for a new home.

Luxury Real Estate Market Trends

The luxury real estate market is in a state of flux, affected by global economic trends and changes in consumer behaviour. However, there are still opportunities for those who understand the current environment and are able to adapt their strategies accordingly. By keeping an eye on the latest news and developments in this sector, you can stay ahead of the curve and get a leg up when doing business in the luxury real estate market. Reading some tips for buying a luxury home can also save you from being deceived by flashy home features and help you get the home you dream of.

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