The August 2023 Institute for Luxury Home Marketing monthly trend report is out now! The following is per the Institute for Luxury Home Marketing August 2023 Market Report:
Understanding the New Reality of 2023
In this month’s report, we take a step back in time to understand why the luxury real market has truly changed, how this new reality for buyers and sellers was created, and why it needs to be appreciated. Using 2019 as our benchmark year, a year that saw a steady and more typical sales cycle but one that also showed a growing confidence in the purchase of luxury homes as the year progressed.
Growth was driven by demand as buyers saw financial potential due to strong stability within the luxury real estate market. Inventory availability in 2019 was not considered to be a factor in preventing sales, as most markets typically saw a significantly greater number of homes for sale than potential buyers. It’s interesting to note that prior to the pandemic it was rare for the luxury real estate market not to be more favorable to buyers, and equally, expectations were that homes would take much longer to sell than those in the traditional market.
As we all know, and it has been well documented, this all changed with the onset of the Covid-19 pandemic and the surge in demand for luxury properties. Demand outstripped supply at a dramatic and voracious level so that even the rapid change of the market in April 2022, which saw an influx of new listings, proved to be too little, given the uptake in sales during May and June of the same year. Like 2019, in 2023 there has been a return of confidence in the purchase of homes, month over month sales volumes have increased, after the market faltered in the last four months of 2022.
However, this is where the similarities end, as while demand is still important, the new reality is the status of the luxury real estate market is now clearly correlated to the level of available inventory. Comparing inventory data in 2023 shows the average level of total listings per month is still approximately 40% below levels in 2019.
The data also clearly shows that it is not just the depleted level of inventory that is holding back sales, but it is the actual number of new listings entering the market each month that must also be directly correlated to sales activity – if the level of new inventory increases, so does the number of sold properties for the month, and vice versa.
This new reality of understanding inventory levels compared to sales is the key to appreciating how the market will continue to favor sellers, especially as many homeowners continue to remain reluctant to list their properties.
It’s safe to say that we can all recognize that the luxury real estate market has shifted, but overall, the market has now found its new norm, slowing from the fast-paced seller’s market of previous years. So, the key to selling and achieving the maximum return on your property lies in leveraging what the market is currently demanding. While each market certainly has its own nuances, one trend has become very apparent in the luxury market – it’s all about the ‘experience.’
No matter who we talk to, savvy homeowners, luxury real estate professionals, developers, architects and designers, they are all putting their emphasis on defining the experience as part of their luxury marketing message. The general message is that luxury is not about throwing money around by adding more fancy materials but rather about creating a comfortable experience that affords the feeling of luxurious wellness and safety.
CLICK HERE to download the full report in its entirety. We are happy to share this information with you. At Carl Johnson Real Estate we use our experience and knowledge to lead our clients in the right direction.
CLICK HERE to read more about Carl Johnson, REALTOR®, Broker, Owner, and Founder of Carl Johnson Real Estate. Carl is certified as an Institute for Luxury Home Marketing Specialist, CLHMS, which means he offers superior knowledge and experience in the luxury market. His CLHMS membership also provides him with access to an elite network of contacts and resources that help drive the perfect buyer to your high-end listing or find you your dream home! Using the most up-to-date marketing information, Carl positions your listing ahead of the market curve.
Call 919-880-0904 for a consultation or CLICK HERE.