Welcome 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 and brought to you by Carl Johnson Real Estate, this report provides an in-depth look at the top residential markets across the United States and Canada.
A Year in Review - 2023
The best way to sum up the luxury real estate market during 2023 might be that it remained "unapologetically resilient", despite a slower year in the overall sales volume compared to 2022. Purchasing a luxury home also retained its appeal with high demand from affluent buyers still looking to realize their desire to buy a new residence. Equally they recognized that the investment opportunity remained, albeit over the longer term.
However, it was a year where buyer demand became hampered by increasing stagnation, with new listings entering the market dropping significantly month over month until the last quarter of the year.
Economic uncertainty, rising inflation and increasing interest rates, led to a growing seller resistance to list their property which further compounded the already low levels of inventory. This was, until the last quarter of 2023, when a shift that started at the end of the third quarter saw more listings enter the market, consequently opening the door for more sales.
Predictions versus Reality
Last year, we predicted that 2023 would see a softer luxury real estate market than 2022. One where properties would stay on the market for longer, prices remain high with little expectation of significant decreases, and where the affluent would base their decisions on long-term investments. All of which have materialized.
While people returned to city life and were happy to embrace smaller footprints again, this did not become a significant trend. Instead, their focus shifted to finding properties that matched their lifestyle expectations – whether that was location, amenities, move-in-ready, intrinsic value, or in many cases all four!
Expectations for a more normalized market, with activity returning to the traditional levels seen prior to the pandemic, did not materialize in the exact manner anticipated either. Hesitation and resistance continued to stall both inventory growth and price reductions expected by buyers, and sellers saw little reason to give up their affordable loan rates or reduce their prices
Demand Trends Changed
The ‘experience’ a home offers became the significant factor in the decision-making process of the wealthy during 2023. No matter who we talked to, savvy homeowners, luxury real estate professionals, developers, architects, and designers, they all put their emphasis on defining ‘the experience’ as part of their luxury marketing message.
The general message is that luxury is about the design, the location of the property and the property’s ability to offer a unique experience. For instance, keeping the essence of the natural surroundings while ensuring that all aspects of their lifestyle, health, privacy, and security are part of the package.
In the past, luxury properties were designed primarily for functionality, even if they were the most stunning mansions or estate homes. But, as we moved into 2023, more architectural and design emphasis was put into properties to promote wellness and well-being, including trends such as:
1. Biophilic design: This is an approach to architecture that seeks to connect its occupants closer to nature by incorporating things like natural lighting and ventilation, natural landscape features, and other elements for creating a more productive and healthier built environment for people.
2. Passive design: This reflects a philosophy of life and how the relationship with the environment should develop with the primary objective of using available resources and maximizing energy savings.
3. Sustainability design: Green architecture and environmentally conscious living are architectural trends that will prevail, offering sustainable solutions such as carbon neutral homes by using natural materials, including recycled resources.
4. Green design: Properties with extensive green spaces, including private gardens, rooftop gardens, and outdoor relaxation areas, remain desirable for health-conscious buyers.
It is predicated that interior design will continue to move in the direction of sustainability in a time when environmental awareness is crucial.
Luxury Properties Retained Their Strong Appeal
Despite the impacts of outside influences, buyers were still eager to invest in luxury real estate, especially if they could negotiate more favorable terms. Properties sold if they were priced correctly or held a special appeal to the current purchaser and, most importantly, were move-in ready – a demand that is set to remain high on the requirements for most buyers well into 2024.
Real estate is still considered to be one of the safest investments as, historically, capital values have appreciated year over year, and even though the rate of return may fall compared to the last two years, expectations are that home values will continue to climb.
As always, we highly recommend working with a luxury property specialist during this unconventional market to ascertain what is truly happening in your local marketplace. Navigating 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.
Did you know that Carl Johnson 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 to find you your dream home from Swansboro to Beaufort and beyond. If you have a high-end listing, using the most up-to-date marketing information, Carl positions your listing ahead of the market curve.
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