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The U.S. luxury real estate market will perform better in the first half of 2024 than in the first half of 2023, according to Coldwell Banker, Compass and Sotheby’s International Realty’s mid-year luxury real estate report.
The number of ultra-luxury homes (valued at $10 million and above) sold in the first half of this year was 3.9% higher than in the first half of 2023, according to a Compass report.
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According to the Coldwell Banker report, single-family home sales for the entire luxury market (defined as the top 10% of the market) grew 2.66% year over year, while attached luxury sales grew only 0.25% year over year.
Luxury home prices have also hit new highs, with the median home price in the top 10% of U.S. homes rising 37.5% from June 2020 to $1.695 million as of June 2024, according to Coldwell Banker.
“Quality properties remain timeless, and the findings in this report demonstrate a strong commitment from both buyers and sellers to completing transactions,” Felipe Hernandez Smith, principal at Compass Luxury, said in a statement. “This is seen across the country. With quality homes to suit every lifestyle, it’s encouraging that quality real estate is always in style.”
Overall, luxury agents and brokers are optimistic about the situation so far in 2024 and where it is heading, with nearly 70% of Coldwell Banker Global luxury real estate experts expressing optimism about the market this year. As the brokerage firm’s mid-year luxury home report shows, some of the key factors agents will be watching as the year continues include dream home buying trends, the election, the economy, and growth and emerging markets.
Consumer Trends: Unicorns and Dream Homes
Coldwell Banker reports that desirable inventory continues to drive demand, especially for homes that don’t require any work before move-in.
More than 44% of the company’s luxury experts said demand for affordable, well-presented homes, especially those that are “unicorn” homes that are move-in-ready, brand new or come with many amenities, remains high.
“Demand for luxury-spec villas and townhouses remains particularly strong,” Coldwell Bankers’ report said. “A contemporary aesthetic using natural materials like wood, open floor plans, eco-friendly features and the latest smart home technology – these are the must-haves, along with flexible and practical living spaces that cater to a variety of experiences, wellness needs and a sense of community . This shift appears to be driven by an increasing number of younger, affluent buyers who have different priorities than previous generations.
Coldwell Banker luxury agents say more luxury homebuyers are now looking for their forever dream home, too. Clients scrambled to find shelter during the pandemic, but now that their lives have normalized and many remote work policies are changing, agents say buyers are looking for new homes that fit their long-term goals. Life changes, such as starting a family, are also increasingly a source of motivation for move-up buyers, agents added.
Image source: Canva
election
time magazine There’s a reason 2024 is called the “final election year” — roughly half of the world’s voting-age population, more than 4 billion people in 80 countries, will be eligible to vote in this year’s election. Sotheby’s mid-year report noted that the results of the US polls could have a significant impact on the housing market.
When it comes to real estate, the Democratic and Republican platforms are also moving in different directions—the Democrats are targeting housing affordability through initiatives such as tax credits and down payment assistance, while the Republicans hope to stimulate economic growth through pro-business policies such as low taxes. and low regulations.
Experienced brokers know that buyers and sellers tend to exit the market during elections.
Christie-Anne Weiss of TTR Sotheby’s International Realty in Washington, D.C., said in the firm’s report, “In my experience, we have seen time and time again that our markets decline in October. Left and right are getting calmer” in anticipation of a general election in November. “Once the election is over and we know who the president is, business will go back to normal. It’s buyer psychology; people don’t make major investment decisions when there’s looming uncertainty.”
International agents affiliated with Sotheby’s International Realty say the same is true in other countries around the world. But political stability can also have a positive impact on markets.
Ashwin Chadha of India Sotheby’s International Realty expects the real estate market to benefit as India’s incumbent Bharatiya Janata Party retains power in this year’s elections.
“The current government has reiterated its intention of high spending to attract investments to boost manufacturing,” Chadha said. “Both infrastructure spending and manufacturing are good for the real estate market, including luxury real estate.”
economic factors
Sotheby’s luxury goods experts said the political situation will undoubtedly have some impact on the market, but changes in interest rates may have a greater impact on buyers and sellers.
“There’s a lot more talk about politics this year, and there’s a lot of polarization,” said Russ Anderson, president and CEO of Briggs Freeman Sotheby’s International Realty in Dallas. “But when it comes to real estate , people are more focused on interest rates than politics. No matter who wins, if interest rates start to come down, I think people will buy if they stay high.
Anticipated interest rate declines have not occurred as quickly as consumers and real estate agents had hoped. Economists now estimate rates will fall in 2025.
“I believe we can say with certainty that U.S. mortgage rates will fall by the end of the year,” Anthony Chan, former chief economist at JPMorgan Chase, said in a report from Sotheby’s International Realty. “When buyers see lower interest rates, they will be less worried about the ‘lock-in effect’ – they will be selling if selling means taking out a higher-rate mortgage for their next home. This will ultimately support real estate activity if the economy avoids a slowdown.
In addition to interest rates, rising prices and low inventory continue to pose challenges for homebuyers. Until inventories reach normal levels in about six months, prices will continue to face upward pressure. Goldman Sachs experts told Sotheby’s International Realty that home prices could rise by 5% in 2024 and 3.7% in 2025.
However, the Sotheby’s International Realty report noted that luxury buyers may be more concerned about the U.S. stock market than interest rates. Anthony Chan added: “If investors perform well, as they have so far in 2023 and 2024, this will boost demand for luxury housing.”
Changes in U.S. interest rates will ultimately also have an indirect, to some extent delayed, impact on the economies of other countries around the world.
“Some estimates suggest it will take one to two years for U.S. monetary policy to have its full effect,” said Julian Brown of Sotheby’s International Realty in New Zealand. “However, there is a large degree of uncertainty as the structure of the economy changes over time and conditions vary.”
Nashville’s ultra-luxury property sales surge so far this year | Canvas
Market Highlights
According to Compass’ mid-year ultra-luxury report, Los Angeles had the highest number of transactions over $10 million in the first half of the year, with 135 transactions and $2.67 billion in sales. Manhattan, Palm Beach County, Miami-Dade County and Orange County rounded out the top five markets for ultra-luxury property sales.
The number of super-luxury home sales has been rising year over year in 20 markets, including Florida’s Palm Beach, Miami-Dade and Orange counties, as some buyers use the investments as a hedge against inflation and often rely on cash. Purchasing power to avoid high mortgage rates.
According to Compass, emerging markets and second-hand housing markets, especially those with tax incentives, grew the fastest in the first half of this year, with sales of ultra-luxury properties in the Greater Nashville area growing at an annual rate of 600% for 7 ultra-luxury properties. Sales, such sales in Central Jersey grew 500%, with a total of 6 ultra-luxury sales.
Among markets with 10 or more first-half sales of $10 million or more, Orange County, Telluride and Greater Palm Springs had the largest annual increases in ultra-luxury sales.
“As the supply of luxury homes increases, our sales will undoubtedly increase further,” said Valery Neuman, an agent with Compass Palm Springs. “Looking ahead, the second half of the year is promising as more and more people discover what Palm Springs has to offer.”
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