The November 2022 Institute for Luxury Home Marketing monthly trend report is out now! CLICK HERE to download the full report. We are happy to share this information to you from our personal resources! The following is per the Institute for Luxury Home Marketing November 2022 Market Report:
Challenging Times in a Market Full of Contradictions
There is little doubt the luxury real estate market is facing some interesting challenges that even have experts contradicting each other in their predictions and assumptions.
Statistics in many luxury markets still show that they are favorable to sellers – so why are homeowners remaining hesitant to list their homes? For the fourth straight month, the number of new listings entering the market has fallen, with increases in inventory levels mainly attributable to stale listings lingering on.
Both sellers and buyers are sitting on the fence, with neither side wanting to jump into this unconventional market unless presented with the right opportunity. The average days on market have increased compared to last year, but relative to pre-pandemic averages, homes that have sold recently are still selling twice as fast.
Outside influences, some of which are not typically identified as being impactful on affluent buyers and sellers, are also causing disruptions to their spending habits: such as concerns over a potential recession, interest rate increases, and a volatile stock market.
Mortgage companies are offering creative alternatives, but even a slight dip in recent rates isn’t driving buyers to purchase despite statistics from the National Association of Realtors (NAR), the National Association of Home Builders (NAHB), and Realtor.com, showing demand still outweighs supply in many price points, property types, and locations.
All indications are that those who need to buy and/or sell are continuing to do so, but for those whose criteria are more based on ‘wanting to buy,’ there is hesitancy as they hope inventory choice will improve and/or prices will become more favorable.
NORTH AMERICAN LUXURY REVIEW Will Prices Fall?
This is a big question, and yet the jury remains cautious as to what extent prices will fall and which locations, property types, and sizes will be most affected.
Since July 2022, there has been a slight, but continued decline in the median sold price for single family homes dropping from $1,311,000 in July to $1,275,000 in September; however, in October, the median price climbed back up to $1,313,525.
In contrast, in the attached luxury property market, the median sold price increased from $832,375 in July 2022 to $890,500 in September, only to drop to $878,500 in October.
These are not dramatic swings, but they show there is some volatility in the luxury market.
Interestingly, a recent article by Nasdaq1 speaks to an increase in the ultra-wealthy currently investing in luxury real estate.
“As the value of the dollar remains volatile, we’ve seen more new clients looking to park their money in a low-risk, luxury asset whose likelihood of appreciation is higher, forged by historically beautiful surrounding neighborhoods, sprawling acreage and square footage, and newly renovated constructions.”
According to their article and The Trend Report 20222 by Coldwell Banker Global Luxury, they foresee the value of luxury properties will continue to appreciate. Both site the historic gains in this segment of the real estate market and explain that prices will oscillate by month or quarter, but how the appreciation is clearly recognized by investors and homeowners as being a long-term decision.
“Prone to behaving cautiously, the affluent have begun to signal that they are looking for more stable long-term investments to protect their wealth and give them peace of mind.”
Luxury Market Still Offers Opportunity
While there is much debate about how things will play out over the next six months, like all markets, there is always an opportunity for those who are ready. There are niches in every market: whether moving to a location that affords a better cost of living, recognizing luxury pockets or property types that are next in the demand cycle, or simply biding one’s time in anticipation of finding a property that is below market value.
But more importantly, according to a survey conducted by Coldwell Banker Global Luxury for their Trend Report, it seems that luxury real estate remains an important asset for the affluent.
“Regardless of an affluent buyer’s financial profile, there is still significant confidence in the luxury real estate market. According to our survey, nearly 90% of respondents believe in the stability of owning property. Even if some buyers have dropped out of the real estate game due to fatigue, frustration, or even hesitation this year, they may be primed to return as inventory levels improve.”
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