LUXURY MARKET REPORT FEBRURY 2022 www.LuxuryHomeMarketing.com
LUXURY MARKET REPORT MAP OF LUXURY RESIDENTIAL MARKETS W elcome to the Luxury Market Report, your guide to luxury real estate market data and trends for North America. Produced monthly by The Institute for Luxury Home Marketing, this report provides an in-depth look at the top residential markets across the United States and Canada. Within the individual markets, you will find established luxury benchmark prices and detailed survey of luxury active and sold properties designed to showcase current market status and recent trends. The national report illustrates a compilation of the top North American markets to review overall standards and trends. Copyright © 2022 Institute for Luxury Home Marketing | www.luxuryhomemarketing.com | 214.485.3000 The Luxury Market Report is a monthly analysis provided by The Institute for Luxury Home Marketing. Luxury benchmark prices are determined by The Institute. This active and sold data has been compiled by various sources, including local MLS boards, local tax records and Realtor.com. Data is deemed reliable to the best of our knowledge, but is not guaranteed.
The Institute for Luxury Home Marketing has analyzed a number of metrics — including sales prices, sales volumes, number of sales, sales-price-to-list-price ratios, days on market and price-per-square-foot – to provide you a comprehensive North American Luxury Market report. Additionally, we have further examined all of the individual luxury markets to provide both an overview and an in-depth analysis - including, where data is sufficient, a breakdown by luxury single-family homes and luxury attached homes. It is our intention to include additional luxury markets on a continual basis. If your market is not featured, please contact us so we can implement the necessary qualification process. More in-depth reports on the luxury communities in your market are available as well. Looking through this report, you will notice three distinct market statuses, Buyer's Market, Seller's Market, and Balanced Market. A Buyer's Market indicates that buyers have greater control over the price point. This market type is demonstrated by a substantial number of homes on the market and few sales, suggesting demand for residential properties is slow for that market and/or price point. By contrast, a Seller's Market gives sellers greater control over the price point. Typically, this means there are few homes on the market and a generous demand, causing competition between buyers who ultimately drive sales prices higher. A Balanced Market indicates that neither the buyers nor the sellers control the price point at which that property will sell and that there is neither a glut nor a lack of inventory. Typically, this type of market sees a stabilization of both the list and sold price, the length of time the property is on the market as well as the expectancy amongst homeowners in their respective communities – so long as their home is priced in accordance with the current market value. REPORT GLOSSARY REMAINING INVENTORY: The total number of homes available at the close of a month. DAYS ON MARKET: Measures the number of days a home is available on the market before a purchase offer is accepted. LUXURY BENCHMARK PRICE: The price point that marks the transition from traditional homes to luxury homes. NEW LISTINGS: The number of homes that entered the market during the current month. PRICE PER SQUARE FOOT: Measures the dollar amount of the home's price for an individual square foot. SALES RATIO: Sales Ratio defines market speed and determines whether the market currently favors buyers or sellers. Buyer's Market = up to 14%; Balanced Market = 15 to 20%; Seller's Market = 21% plus. If >100%, sales from previous month exceed current inventory. SP/LP RATIO: The Sales Price/List Price Ratio compares the value of the sold price to the value of the list price.
is not turning over a new leaf, there is certainly an appreciation that a leaf has been turned when we look at the other ongoing trends; including a greater diversity in location choice, property types, ownership levels and what amenities have become major priorities for affluent homeowners.”
Is Luxury Real Estate Turning Over a New Leaf? The end of each December always seems to bring a feeling that the tolling of midnight on December 31st will bring about a change in the New Year — better fortunes, better resolve, and better luck. However, isn’t the reality that trends tend to slip seamlessly from one month or one year to another; with some holding their patterns for longer than others, while others create larger or smaller impacts than expected? Can 2022 really be that different from 2021? Certainly, most years in real estate see ups and downs with respect to sales, prices, and inventory levels, with 2021 being a beyond exceptional year for the luxury market. The National Real Estate Association (NAR) stated in a recent report that there was a historic rise of properties sold in the $1-5 million range between January to August 2021, by 142% for single-family homes and 129% for attached homes, compared to sales in 2019 for the same period. So how is it possible to predict that 2022 will be a calmer year for the luxury real estate market? Are trusted trends really expected to return, including a spring real estate market with increased inventory levels, which, in turn, may help to create of a plateau for price increases? Past and current trends combined with analytics are often our best guides. For instance, the month of January has always reported a quieter month for real estate transactions, specifically for singlefamily homes, except for sunshine destinations such as Florida and Arizona as snowbirds head south to avoid the colder weather patterns of the north. In fact, trends are showing that a price plateau is more than likely for at least the first quarter for 2022, as both single-family and attached property median prices have remained fairly consistent
up until March of the following year are also following normal trends, although at a much lower level, as the number of luxury homes for sale has hit a 20-year low. It is also possible to predict that affluent buyers will continue to create a strong demand for luxury homes in 2022. The data for January 2022 already shows this strength of demand with singlefamily home sales increasing 29% and inventory decreasing 28% over January 2021. On the luxury attached side of the market, inventory is down 42% and sales are up 30%, year over year. This level of demand continues a trend started in June 2020, created initially by pandemic. However, the spring 2021 buying frenzy trend is not expected to continue because of the escalation of luxury prices, increasing levels of homes anticipated to enter the market, and importantly the change in buyer priorities. Instead, 2022 should see affluent buyers take a more considered approach and make more discerning decisions about property values, which will naturally slow the pace. While the demand for luxury real estate market is not turning over a new leaf, there is certainly an appreciation that a leaf has been turned when we look at the other ongoing trends; including a greater diversity in location choice, property types, ownership levels and what amenities have become major priorities for affluent homeowners. For luxury real estate professionals, more importance will be need placed on fulfilling their client’s future “must-haves”, which were once “wants,” and recognition that, due to inventory constraints, this will often entail a longer search because their buyers are now focused on making longer-term real estate decisions These decisions are also no longer only about buying or living full-time in their larger metropolitan cities and having a second home as a vacation property.Expectations are that the affluent will continue purchasing homes in multiple destinations, or changing their primary residence
opposite locations. That being said, the claim that people are all leaving the city has been a little overblown, and there has been a substantial move back by those not ready to give up their metropolitan lifestyle. However, there has been a shift - with those returning to the city wanting much larger residences offering space as well more sophisticated amenities and technology that addresses their health and wellness requirements. Other affluent homeowners are keeping their options open, keeping one foot in the city with a purchase of a pied-à-terre and their larger residence in different location, but one that allows them to travel easily back and forth to their metropolis. Interestingly, the luxury terminology of “owning a vacation property” is gradually being replaced by “we can work from anywhere, so will be at our other home for the next few days.” 2022 is also anticipated to be a big year where we will see the affluent look carefully at diversifying their asset portfolios, both for financial reasons such as tax advantages or moving their wealth from the stock market or cryptocurrency, as it will be to find properties that fulfill their need for well-being, family unity, and lifestyle requirements. This desire to own multiple homes will be one of the factors that will keep driving the sales of luxury real estate market well into 2022. Another will be entrance of millennial buyers, who are
or because of their parents’ relocation, to a less expensive home, will free up the sold property’s realized equity. Today’s affluent buyers who are looking to diversify say that their desire stems from wanting to own a second home in a remote or resort-style location or to capitalize on an opportunity to move from one metropolis to another. Growth in secondary city markets throughout North America has seen a huge jump over the last few years – due to major corporations moving in or expanding, a surge in technology company growth, and due to affordability of owning in the more luxurious locations within these cities. The opportunity to own a home that offers five-star amenities whether it’s a fully appointed home with luxury features that include environmentally and sustainability focused attributes or a property with a larger yard, close to their lifestyle preferences with extraordinary views, these are all far more financially achievable in these new city locations. Luxury and sustainability amenities will be the key drivers of the decision process for affluent buyers in 2022, together with a property being turnkey. Plenty will still be ready to pay a premium not to have to deal with renovations or even decorating, and in some cases, especially resort purchases, buyers are more than willing to buy all the furnishings too. 2022 will still prove to be an interesting year in the luxury real estate market as we have yet to see the return of international buyers and investors. Still, the word “home” remains a top priority for many, and the world is finally ready to recognize the need for substantial social and environmental change. The art of selling and buying in this market needs a critical and analytical approach, understanding the realities and setting expectations accordingly will ensure that goals are achieved. For homeowners looking to buy or sell in today’s market, we recommend working with a realtor who can capitalize on the preferences, trends, and demands in this dynamic and evolving environment.
FOR THE LUXURY NORTH AMERICAN MARKET Single-Family Homes Attached Homes Single-Family List Price Attached List Price All data is based off median values. Median prices represent properties priced above respective city benchmark prices. 36 18 20 21 11 11 10 13 JAN FEB MAR APR 16 10 12 12 MAY JUN 14 12 15 13 JUL AUG 14 OCT 16 16 14 12 SEP 17 17 14 NOV DEC JAN $414 $530 $546 $414 $396 $398 $500 $508 $533 $393 $482 $386 $482 $372 $387 $495 $381 $478 $513 $383 $300 $377 $387 $400 $494 $500 $520 $600 $487 PRICE PER SQUARE FOOT 35 33 0 $200 $100 $0 SALES PRICE VS. LIST PRICE 37 $363 DAYS ON MARKET 40 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN $2,100,000 $1,900,000 $1,700,000 $1,500,000 $1,300,000 $1,100,000 $900,000 $700,000 $500,000 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN Discrepancies in previous month statistics between the January 2022 and February 2022 reports are due to the addition of Mississauga, ON; Westmount, QC; Greater Chattanooga, TN; El Paso, TX; Lubbock, TX; and Spokane, WA.
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