Super-Luxury Soars, Defying Economic Slowdowns

Despite growing inventory and higher interest rates, the top end of the luxury market remains robust and healthy as a whole. Whether in traditionally high-priced markets like New York City and South Florida or emerging areas such as Virginia Beach, it’s clear high-net-worth buyers and sellers are comfortable with current conditions and ready to be active in the market.

“We still have a very buyable market,” said Barbara Wolcott, chairman and CEO, Berkshire Hathaway HomeServices RW Towne Realty in Virginia Beach, Virginia. “We are still seeing multiple offers regardless of price point, all of the way up to the highest ends of the luxury market.”

Ron Shuffield, president, Berkshire Hathaway HomeServices EWM Realty in South Florida, added that although sales in the $10 millionplus market were down 58% in the second quarter 2023 from the year-earlier quarter, pending sales are significantly up, potentially showing a tipping point that buyers are feeling like market conditions have settled.

He added that increasing inventory over the last 12 months has encouraged some luxury buyers to explore transactions, even in spite

30% of monthly payments going up as much as 50% from 18 months ago, mostly due to rising interest rates.

“Buyers have lost a third of their buying power, and (it’s important to remember that) buyers have lots of other things connected to interest rates (businesses, other properties, etc.) even if they’re paying cash,” he noted.

Buyers are also likely being enticed by stronger inventory numbers with MiamiDade County showing a 15% increase in the second quarter 2023 from the year-earlier quarter in the $5 million-$9.9 million price range. Inventory in the $10 million-plus category is up 30% over the same period.

Where Shuffield sees particular strength is in South Florida’s condo market, where as of the second quarter, there were 57 pending sales over $10 million, representing a pace more than twice that of single-family homes. More condo buyers are living in them fulltime, whereas previously they were primarily second residences. “Each condo building has amenities like a mini country club,” he said.

While waterfront property in South Florida will always remain strong, Shuffield noted a shift to downtown Miami because that’s where some of the newer offices and businesses are, and it’s closer to a larger hub of activity

Super-luxury in Manhattan are now in the $20 million-$30 million range as opposed to $10 million-and-up, experts say.

$20M-$30M compared with the beach areas. He cited local market data continuing a decade-long trend of condo sales representing as much as 60% of the overall market.

Condos Also Driving NYC Market

Brad Loe, executive vice president and director of sales, Berkshire Hathaway HomeServices New York Properties, said New York City’s luxury market is only getting stronger, especially as new construction condos drive the highest-level transactions.

“People are coming back and we’re in a good place in the city right now,” he said.

He said that as of late July 2023, there were a little more than 450 active apartments and townhouse listings above $10 million in Manhattan, with around 130 pending, which represents a small decline from the start of the year. He added that buyers are not getting as much value as they used to at the $10 million level, now moving up to $20 million and $30 million for what’s traditionally considered “superluxury.” Amenities like pools in the basement, penthouses with 360-degree views and specialty dining rooms are now all expected at this price point.

“The cost of all of this isn’t going down,” Loe said.

Weakness in the Dollar Curbing Hawaii Interest

Perhaps the one area where the superluxury market is cooling quickest is in Hawaii, where a strong U.S. dollar and soft momentum from reopened borders slowed sales in the $5 million-plus category.

“Condos in the metro area are usually international—with a big following from Japan and Korea,” said Kalama Kim, president, Berkshire Hathaway HomeServices Hawai’i Realty. “But, we haven’t seen as much activity because of the strength of the U.S. dollar over the last couple of years.”

He noted that even though super-luxury sales are down slightly on the most populous island of Oahu, they’re still on track compared with last year. He also cited that the pandemic trended toward sellers holding onto prized properties. In Honolulu, specifically, single-family home sales in the $5 million-plus category are down 44.7% in unit sales year over year.

“We thought we’d see international owners sell, but that hasn’t happened, they probably just want to keep and enjoy their homes rather than sell them,” Kim said.

Naples: The Epitome of Ultra-High-End Florida Migration

However, for a market like Naples, Florida, a lead example of interstate migration, there is still immense interest.

“Our out-of-state market comes from the Midwest, but we’re starting to see buyers come from California looking for a second home, and that money is driving up prices,” said Rei Mesa, president and CEO, Berkshire Hathaway HomeServices Florida Realty.

Naples’ super-luxury offerings are typically trophy homes and condos, usually on the water, and often endure major demand as supply at the $10 million-plus price point remains limited.

As a result, higher prices are spreading to areas such as Melbourne on the other side of the state.

Mesa also noted that the early 2025 arrival of a new Four Seasons Hotel and Residences is driving top-level demand in the condo market, even in an area with two well-established Ritz-Carlton Residences.

“Demand has been overwhelming for them at the Four Seasons,” he said.

There is a larger rebuilding trend sweeping through the whole Naples area, whether the city proper, or in Sanibel Island to the north. Properties more than a decade old are being modernized, not just for modern amenities, but to meet the need for climate resilience.

“There is a big focus on hurricane resilience and building homes with materials that use less energy,” Mesa said. “Homeowners are getting very creative with building.”

Miami-Dade County SingleFamily Homes

The Berkshire Hathaway HomeServices EWM Realty

2023 Mid-Year Market Update compares the second quarter of 2023 with 2022. In Miami-Dade County, homes over $5 million are seeing more inventory, fewer sales, but higher prices.

$10 MILLION AND HIGHER MARKET