The Dawn McKenna Group (DMG) would like to welcome you to The Report 2023: Global Luxury Market Insights. In the last year, as the economy continues to defy predictions and housing market data fluctuates on a seemingly quarterly basis, there are more than a few words that could apply to the current luxury residential landscape: resiliency, adaptability, contradiction, transition, adjustment, resetting.
Declarations of 2023 as a year of correction by some in the media may prove to be the most apt description of where the real estate market sits presently. But only time will tell if this title holds against the tides of reality. Expectations have shifted more recently, with all eyes on the second and third quarter of 2023 to post a stronger showing for luxury real estate, but one where a more sedate, measured approach will continue to be taken by buyers and sellers alike.
What is clear is that 2023 is not 2021 – a year of unprecedented sales, price increases, and demand. Therefore, usual year-to-year comparisons are naturally going to yield declines if we only analyze first quarter 2023 numbers against recent years, or 2022 against 2021.
These results will distort the perception of what is actually a market normalizing, and where sales volume will trend closer to the numbers seen in the years prior to the pandemic. That being said, contrary to typical expectations in a slowing market, prices are still trending up, albeit at a much slower rate, and this is a result of inventory levels remaining below historic norms.
In summary, expectations are that the combination of these factors will actually help to keep the market balanced for the foreseeable future.
Local Expertise, Global Reach™ has been the foundation of our success since the founding of the DMG. Selling luxury real estate requires knowing your market and reaching affluent buyers in your backyard and across the globe. That is why for the last two decades we have been not only building the best team in real estate and expanding our reach with offices in new markets, but also cultivating the local, national, and international relationships that now form the heart of our business. Strategic alliances and friendships ensure domestic and international agents instantly connect us to potential buyers all over the world. Our local expert team ensures those buyers like what they see.
Our goal of providing local expertise and global reach is showcased in this comprehensive report; it reflects our commitment to staying at the forefront of trends, insights, and shifts in the luxury real estate market, both locally and globally. We hope you enjoy The Report.
6
8 Meet the Dawn McKenna Group
14 Luxury in Review 2022
Mixed quarterly data signals the start of a housing market correction
26 U.S. Luxury Outlook 2023
The trends most likely to define the next iteration of American high-end property buying and selling 28
80 New Narratives for 2023
The next stories shaping the luxury real estate landscape
82 Second Homes Move from Niche Market to Mainstay
88 The Psychology of Pricing
96 The Outsized Influence of the Top 20%
98 Market Misconceptions Debunked
106 Global Luxury Outlook 2023
The trends currently driving high-net-worth global property buying
108 Wealth and Population Overview
112 Where the Affluent Own Primary Residences Globally
114 Where the Affluent Own Second Homes Globally
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A
118
Closing thoughts on a market searching for a new equilibrium
122
Coldwell Banker Global Luxury® data sources and references
126 Luxury by the Numbers 2023
The power of local expertise with global reach
127 Coldwell Banker Global Luxury® Numbers
128 DMG by the Numbers 2022
After three years and 40% price increases in the luxury home sector, uncertainty took root after the Federal Reserve started hiking interest rates in March 2022 to curb inflation. The market appears to now be normalizing to traditional levels.
Inventory, sales, and prices all rose in the second quarter, only to stall in the third and fourth quarters, as the market reacted to outside influences. Expectations are that the spring market will return in 2023.
High-Net-Worth (HNW) individuals are expected to shift focus to conscious spending and futureproofing, while Ultra-High-Net-Worth (UHNW) individuals will continue to live for the moment and prioritize personal enjoyment.
Over half of Luxury Property Specialists surveyed said that they expect 2023 luxury home prices to remain flat or up slightly from 2022. Over half said they expect demand to remain consistent throughout 2023, while nearly 30% said they thought demand could be stronger by the end of the year.
Most Luxury Property Specialists said that indoor-outdoor living spaces, a chef’s kitchen with up-to-date appliances, and a home with a breathtaking view are their clients’ top must-have home amenities. Meanwhile, 40% said that their clients define a dream home by its views and 36% said quality of construction or materials.
Discover how the decision power of affluent buyers and sellers is influencing the luxury real estate markets of Chicagoland, Naples, Lake Geneva, Harbor Country and Park City. Low inventory, rising prices and a strong demand are the signature of each of these markets.
Inventory may still be the lynchpin of the luxury market in the downtown core and suburban areas throughout Chicagoland, and very much expected to continue to shape the outcome of sales in 2023, but opportunity is already favoring buyers willing to change their expectations.
Wealthy Chicagoans are investing in luxury homes and favoring the purchase of multiple second homes both locally and out of state. Others are choosing their ability to work from home to allow them to relocate to these second home markets – what is the attraction and the opportunity.
The percentage of U.S.-based individuals with a net worth of $5 million+ who own two or more properties increased from 70% in 2021 to 79% in 2022, per Wealth-X. Among those, over 16% of their wealth is allocated toward real estate and other luxury assets.
An analysis of 10 prime U.S. markets from New York to Los Angeles showed that the wealthiest spenders carry an outsized influence in the high-end residential sector.
New York is still the No. 1 city globally for HNW primary residents and secondary-home owners, but Singapore jumped into the top 10 in 2022, taking the No. 4 and No. 7 positions, respectively. Now that China has lifted its COVID-19 travel restrictions, experts also predict increased movement from this part of the world.
Borders have opened up, and with it has come increased global travel and a growing affinity for property ownership in foreign countries among HNW individuals. Their reasons for looking beyond their home country range from economic to political and financial, but their penchant for exclusivity and adventure plays a key role.
THE DAWN M c KENNA GROUP IS THE #1 LARGE TEAM IN ILLINOIS, #1 LARGE TEAM IN THE MIDWEST, #1 LARGE TEAM IN NAPLES, FLORIDA AND THE #4 LARGE TEAM IN THE U.S. AMONG ALL BROKERAGES WITH OVER $3 BILLION IN CAREER SALES.
The #1 Team in Illinois and Naples and the #4 Team in the entire U.S., the Dawn McKenna Group is a hand-picked collection of local real estate experts who provide the most sophisticated, energetic, and professional residential real estate experience in the nation.
Dawn herself is one of the most successful, creative and sought-after luxury real estate agents in the U.S., not content to simply follow trends and is always several steps ahead. She leads her team with her inimitable energy, style, deep market knowledge, and passion for delivering personal service. And so, they are motivated to use their varied backgrounds and experiences to be leaders in their markets. Yes, the DMG’s numbers are quite impressive, but it is their team of professionals and their enthusiasm that set them apart.
We have the ability to meet our clients’ needs at every stage of their life – from their first apartment in the city to a house in the suburbs, to a second home in the Naples sunshine or one of the lake communities close to Chicago, and/or an energizing ski-in/ski-out residence in Park City. It is service that is personal, energetic, and caters to a client’s individual needs. As a result, we exceed the industry’s averages, our competitors’ performance and, most importantly, our clients’ expectations.
At DMG, we accomplish all of this by not resting on our laurels or being content with mimicking the strategies and tactics of the rest of the
residential real estate industry. We strive to set new standards for innovation, customer service, and use of technology.
Whether it is using advanced data analytics, exploiting the latest social media trends, continually expanding our network of relationships, or simply doubling down on hard work and personal attention to our clients’ needs, we know that there is no time to rest. Our passion for real estate is genuine.
We pride ourselves on wrapping these hard-core business principles and practices in a beautiful, stylish package. With bespoke brochures and stunning, eye-catching ads and social media content created by our in-house marketing team, DMG reaches out to buyers and sellers with messages that are appealing to the eyes as well as the heart and mind. On a personal level, we are trend setters in the use of professional staging, brokers’ tours and open houses rich with food and music, and joint marketing with cutting edge artists, luxury product retailers and local artisans to create buzz around our clients’ homes. Life is a banquet and we never forget it.
The DMG truly is different than the other brokers and teams in the industry. We’re invigorated, collaborative, and effective, and we’re proud of what sets us apart. We’re the Dawn McKenna Group and we’re here for you.
DAWN M c KENNA
BARI KESNER
DAWN M c KENNA
CAITLIN SMITH
ALLIE CIPRA
TORY REZIN
MADDIE M c MAHON
JOY LARKIN
MARIA CALI
Founder
Chicago, IL
Hinsdale, IL
DMG Rentals
ANNIE ROYSTER LENZKE
Lake Forest/Lake Bluff, IL
JEAN ROYSTER
The Dawn McKenna Group (DMG) is renowned for continually setting new standards. This has led to the recognition of DMG being an industry leader, not just in Coldwell Banker, but among international peers in affiliations such as the International Luxury Alliance and Global Collective.
Although Dawn McKenna has been the No. 1 Coldwell Banker agent in Illinois for the past 15 years the reason for her success is more than just providing service within her local communities. She has recognized that her affluent clients’ needs are constantly changing, growing and expanding into new markets - all of which requires a different standard of service.
Expanding DMG’s Network Hand selecting local agents, that shared her vision, Dawn has expanded DMG’s network into seven markets:
• Chicago, Lake Forest/Lake Bluff and Winnetka, Illinois
• Lake Geneva, Wisconsin
• Naples, Florida
• New Buffalo, Michigan
• Park City, Utah
“Dawn and her team sold our penthouse in the West Loop for a record-breaking price in less than three weeks — all while helping us relocate our family to the western suburbs. Dawn’s team made the move infinitely less stressful from start to finish.”
“Dawn and her team not only helped us sell our home in Hinsdale, but in the middle of one of the hottest markets for luxury properties in Naples, secured us our new forever home that met all our criteria. Their dedication and attention to detail was unsurpassed.”
COREY & KRISTY CRAWFORD
“ ACCORDING TO U.S. NEWS & WORLD REPORT, DMG IS THE NUMBER ONE REAL ESTATE FIRM IN ILLINOIS AS OF APRIL 2023.” 1
DMG’s growth has been strategically planned then carefully implemented, while continuing to provide the quality of service that is now synonymous with this team’s determination to surpass their client’s expectations. But more importantly DMG’s focused expansion has been built on the aspirations of its clients.
“We want to be there for our clients’ whole life cycle, whether it’s their first Chicago apartment or a move to the suburbs, if they are looking for a second home within commuting distance, or when they are ready for Naples’s sun or Park City’s snow or even owning multiple homes!” stated Dawn McKenna.
“Dawn and her team helped my family sell our singlefamily home in Lincoln Park, as well as buy our current home in Hinsdale. We were thrilled to work with her in both markets. Her knowledge of the business is unparalleled, and she made the transition to the suburbs seamless and smooth. I couldn't have asked for a better, more personal, and joyful experience to enter my family into our new suburban home.”
TAKI KASTANIS, OWNER/FOUNDER OF YOLKWESTERN SPRINGS - 4132 GROVE AVENUE DMG represented the Seller
The luxury housing market appears to be adjusting after experiencing rapid growth through 2020 and 2021. The 2022 market revealed challenges that had experts contradicting each other in their predictions and assumptions. Especially confounding to them was the fact that many luxury markets still showed favorable conditions to sellers at the end of the year.
The best way to understand the 2022 luxury residential market is to look at it from a quarterly point of view. Each quarter demonstrated very different market characteristics.
The first quarter of 2022 started strong, continuing the pace set in 2021. Escalating demand and some of the lowest inventory on record brought home prices to new heights. Two unique fixtures of the 2021 market – multiple offers and homes being sold over asking price – remained in the first quarter. A
severe lack of inventory was the main reason why the number of sales was not higher.
Prices continued their upward streak, rising by 5.9% for single-family homes and 20% for attached properties in the first quarter of 2022 compared to the last quarter of 2021.
Meanwhile, inventory levels dropped 27.1% and 27.8% for the same period, respectively. Somewhat atypical was the robust buyer demand exhibited during the first quarter of 2022, since the first part of the year is traditionally considered a slower season for real estate (except for snowbird markets). If new properties came on the market, they were snatched up quickly.
Median Sold Price
Single-Family Homes Condos
Average Monthly New Inventory
Average Monthly Inventory Sold Homes
$1,594,500 5,210 14,236 20,393
$1,100,000 1,976 5,292
7,278
3,008
7,273
10,096
The second quarter began to signal change following the Federal Reserve’s March 2022 0.25% interest rate hike – the first increase since December 2018. The S&P 500 decreased by 16.1% in the second quarter1 – the highest quarterly decline since the first quarter of 2020. Concerns over inflation and the impact of the Ukraine war also started to breathe an air of uncertainty into the high-end property market.
Adversely, luxury home prices continued to rise and affluent buyers finally began to feel the pinch of higher interest rates.
Newfound buyer hesitancy coincided with the typical spring uptick of new listings, producing the first notable increase in luxury home inventory levels since September 2019. Inventory levels rose by 69.1% for single-family homes and 35.4% for attached homes from the first and second quarters – faster than most industry experts’ expectations. New inventory also increased by 108.6% for single-family homes and 52.2% for attached homes. With this surge of new properties hitting the market, buyers were suddenly presented with more options than they had in the last two years. The number of sales promptly followed suit, increasing 67.8% for single-family homes and 38.7% for attached homes.
A notable downshift in demand for luxury properties occurred in the third quarter as hesitancy took root and affluent consumers fully absorbed the shock of interest rate hikes, stock market declines, and inflation. Additionally, July and August are typically slower months for property sales.
That being said, higher interest rates most likely have had the greatest impact on the demand. It meant that luxury sellers would have to trade in a lower interest rate for a significantly higher one as mortgage rates rose to 6% in September, which likely led many of them to simply hold off on listing their homes if they didn’t need to sell. This would account for why new inventory levels declined from the second quarter to the third quarter.
Meanwhile, overall inventory levels increased as a result of older listings remaining on the market longer. This is seasonally unusual for September, which typically sees an uptick in sales activity.
“ NEW INVENTORY LEVELS DECLINED FROM THE SECOND QUARTER TO THE THIRD QUARTER.”Source: Institute for Luxury Home Marketing LAKE GENEVA - W4321 N. LAKE SHORE DRIVE DMG represented the Seller
The final quarter of 2022 may be remembered for being one of the most contradictory three-month periods in luxury real estate. By December, the majority of luxury property markets across the U.S. still exhibited conditions more favorable to sellers than to buyers. Prices had not decreased as much as industry analysts predicted in June and July. Yet the number of sales continued to fall.
There are several reasons for these anomalies. The lack of new inventory entering the market continued to limit high-net-worth (HNW) buyers’ choices in desirable locations and therefore the number of sold homes. Furthermore, sellers and buyers could not align expectations on price, causing listings to sit on the market longer.
Inconsistency ruled across locations and markets. While some sellers might have lowered their prices in certain overheated markets, other traditional luxury markets did not see price reductions at all if they were attracting international buyers or the work-from-home crowd.
At the end of 2022, median luxury single-family home prices across 125 U.S. markets slipped only slightly from the second quarter peak but remained flat compared to the start of the year. There are a few reasons thought to be responsible for this decline. Affluent buyers, crunched by higher interest rates, sought smaller, lower-priced
Median Sold Price
homes or paused their purchase plans. Others began to turn their gaze toward second homes and investment properties, which are typically lower-priced.
Time will tell if this modest price decline is a trend that will carry over into 2023, or if the general property market will continue its contradictory reign.
Average Monthly New Inventory Average Monthly Inventory Sold Homes
$1,570,000 6,325 29,148 17,260
$1,158,700
2,082
8,969
4,912
Gradually, the 2022 market appeared to be resetting to pre-pandemic conditions.
• Luxury properties were taking longer to sell.
• Buyers didn’t have to compete with as many multiple offers or feel pressure to offer overasking price without contingencies.
• Major metropolitan areas were once again in demand.
• Condos and homes with smaller footprints became “smart buys.”
• As brick-and-mortar luxury retail, hotels, and travel roared back to life, people’s lives took them outside of the very homes they so desperately sought in 2020 and 2021.
CHICAGO - 1304 N. RITCHIE COURT DMG represented the Seller“ AMENITY FILLED, MOVE-IN READY, AND LIFESTYLE LOCATIONS ARE NOW TOP OF BUYER LISTS.”
The most noticeable market changes were slowing sales and flat prices year-to-year – but more subtly, consumer mindsets shifted. During 2020 and 2021, people were more focused on purchasing properties that addressed short-term lifestyle needs during the pandemic – i.e., more space, larger backyards, two offices, playrooms for the kids, etc.
Money was a distant concern for most affluent buyers at the time, especially as their savings, equity and investment portfolios grew during the pandemic boom. Interest rates were at historic lows. Fast forward to 2022, and money became top of mind. Even the wealthiest of individuals were back taking a more cautious, long-term view of real estate, whether it was for financial security or good investment return.
Uncertainty and hesitancy for both buyers and sellers were new features in the market, causing a stalemate. If HNW sellers didn’t need to sell, they simply refrained from listing their properties. Similarly, HNW buyers were less likely to settle for a property they didn’t want, especially since they suddenly had more buying power.
Location was no longer the main driver for many of them, who were still freed up by work-from-home arrangements. Amenity-filled, move-in-ready homes and locations that offered their preferred
lifestyle were now at the top of their list. Seeking a hedge against inflation, they also knew they could move to a lower tax state with better house affordability – an increasingly attractive alternative for the younger affluent generations of buyers who tended to be more price-sensitive and less enamored by prestige addresses.
If a seller did list their home and a buyer did put an offer on it, they may not have been able to align on price. Finding it difficult to shrug off the not-too-distant memory of 2021’s historic price appreciation, some sellers were not ready to negotiate on price. Meanwhile, buyers knew they had other options and could walk away from deals. The result was that fewer luxury buyers and sellers were making moves.
This standoff between affluent buyers and sellers was already revealing itself in the market by the end of 2022 as inventory and sales levels dropped, and prices remained relatively stable. But it is also important to put these numbers into historical perspective. The holiday season is a slower time of year. If you compare sales in the final quarter of 2022 to the same periods in 2018 and 2019 –two “normal” years – the December numbers also dropped along with inventory.
This shows that what continued to hold back luxury property sales in the final quarter was the lack of new inventory.
Without question, inventory has played the most significant role in the changes that occurred in 2022.
• If inventory increased, sales increased.
• If inventory dropped, sales dropped.
• The lack of new inventory coming onto the market continued to keep prices persistently high despite interest rates rising.
“ SELLERS PAUSED PLANS TO LIST NEW INVENTORY IN MANY MARKETS.”LAKE FOREST - 135 GREEN BAY ROAD DMG represented the Seller
In the first quarter, inventory levels were historically low, and equally for new inventory. This depletion was the continued result of the buying frenzy that began in 2020. Sellers were hesitant to list because they feared they might not find another property. New inventory that checked all of buyers’ boxes were selling 10 to 15% over asking price. During this time, stock markets were at an all-time high and interest rates were at an all-time low.
Second quarter, which includes the busy spring buying season, saw the most dramatic swing in inventory. Sellers on the fence recognized that now was the time to sell to capitalize on the historically high prices. Conversely, the high prices naturally forced a cap on demand with fewer luxury buyers willing to pay. Stock market declines and other economic factors began to weigh down demand as well. There was also a smaller buyer pool since many had already purchased their primary homes during 2020 and 2021.
Despite more overall inventory available in the third and fourth quarters, it was not enough to satisfy the increasingly discriminating buyers now in the market. Undesirable homes, especially those needing renovations or overpriced, sat on the market while new sellers paused plans to list new inventory in many markets. However, not every market saw the same drop in new inventory and overall inventory increases; some remained competitive seller markets by the end of 2022.
Despite turmoil in the financial markets and increases in overall inventory, luxury home prices remained relatively stable throughout 2022 and at near-record levels.
• A lack of new desirable inventory kept prices high.
• Buyers became more discerning.
• Emerging affluent consumers continued to place high value on owning a luxury home.
One of the biggest challenges for both sellers and buyers in 2022 was the uncertainty of where prices would eventually settle. Should they sell now when the market is less favorable or wait to see if the market improves in 2023? Buyers were equally concerned, not wanting to pay current prices if they believed that values would trend down. This phenomenon kept the market in flux and was the reason why desirable inventory levels fell in the latter part of 2022. With so little desirable inventory on the market, it also kept prices stable.
With the buying frenzy of 2020 and 2021 behind them, affluent buyers could focus on what they truly wanted in a home with less competition. Many refused to settle for anything less than total luxury, however they defined it. They put greater emphasis on home size, condition, and amenities, rather than location. That meant homes that did not meet their criteria languished on the market while the most desirable homes sold quickly at, or slightly over, asking price – keeping the year-toyear median luxury home price steady.
1,591
Conversely – because 2022 prices did not decline much from the previous year’s highs, rate-sensitive buyers suddenly found that their million dollars didn’t carry them as far.
They began searching for homes that offered them good value for their money. To sustain the same level of luxury they wanted in a home, some of them expanded their searches to emerging markets with better affordability. Some reduced
their square footage requirements. Others took their money and invested it in a second home or income-producing property for a long-term hedge against inflation.
Purchases made in 2022 ultimately reflect the intrinsic value placed on luxury properties by affluent individuals, especially the mass affluent. Indeed, a greater share of their wealth went toward real estate compared to other assets last year.
The purchase of homes valued over $1 million –a figure considered by the National Association of REALTORS® to be a benchmark for luxury residential real estate in the United States – tripled from 2.6% to 6.5% since 2018.
Some of this growth could be attributed to sheer volume since larger, more expensive luxury homes were in higher demand following the pandemic. It could also be viewed from the perspective of demand. A greater number of HNW individuals now consider owning a luxury property a necessity for their asset portfolio. All indications are that this trend is here to stay, even as buyers’ definition of luxury continues to evolve and experts expect demand to reset to a more sustainable level in 2023.
13.9% 16.2%
HINSDALE
The 2023 luxury real estate market will be one of contradictions. To help you find your way through the fog of a fluctuating market, we compiled insights from Coldwell Banker Global Luxury® Property Specialists, Luxury Institute CEO Milton Pedraza, and other thought leaders on what lies ahead for the U.S. luxury real estate sector.
Inconsistency may be the new normal for affluent consumers. Net-worth gaps are expected to emerge in 2023, revealing different sets of priorities and values. Read on for further insights into affluent consumers’ shifting mindsets and a comprehensive view of the challenges, opportunities, and trends to watch in the luxury sector over the coming year.
“ CONSCIOUS SPENDING FOR SOME AND PURSUIT OF PERSONAL ENJOYMENT FOR OTHERS ARE TRENDS FORECASTED FOR 2023.”CHICAGO - 250 E. PEARSON STREET #1805 DMG represented the Seller
Despite growing numbers of high-net-worth (HNW) individuals worldwide with access to disposable income, economic uncertainty this year could cause some of them to momentarily temper their spending.
This trend is expected to be most pronounced in the mass affluent sector, as these individuals focus on shoring up their personal finances, careers, and mental health. Some may embrace ideas like “conscious spending” and “minimalist luxury.” 1 The mindset of buying fewer but better items is especially appealing to younger generations of affluent consumers who tend to be more socially and environmentally conscious than their older counterparts.
Meanwhile, ultra-high-net-worth (UHNW) individuals who are better positioned to weather economic declines, are poised to drive demand for the highest priced properties and luxury goods this year, buoying the overall luxury sector. These individuals tend to be more mature in age and are still embracing a “You Only Live Once” (YOLO) mindset when it comes to the pursuit of experiences or things that bring them personal enjoyment. A renewed focus on generational wealth creation, as well as the prioritization of wellness, travel, and leisure will remain utmost for them.
As CEO of the Luxury Institute, Milton Pedraza has his finger on the pulse of luxury consumer trends. Here, he offers his insights into the shifting values and desires of affluent consumers as they transition from a “boom” to a “buoyant” mentality in 2023.
What is your general outlook for affluent consumer spending this year?
There is still a level of uncertainty about the economy, but because affluent individuals are generally economically resilient and have pent-up demand for experiences such as travel, wellness, and fitness, the overall luxury industry will grow in the single digits. My prediction is that growth will be about 3% to 5%, with the top 20% of all wealthy consumers generating 70% of sales and the bottom 80% – aspirational luxury consumers – driving about 30% of sales.
What is your outlook for luxury real estate?
Real estate spending will depend on who is buying the homes. For many UHNW individuals, they have so much money that a $10 million or $20 million home is insignificant compared to their vast wealth. They won’t be deterred. Many of them are older and are still in the “seize the day” mindset that started during the pandemic. They are still saying, “Life is short. I’m living for now and I’m going to buy whatever I want to enjoy for today.” Aspirational luxury consumers are much more sensitive to stock market declines and inflation eating into their buying power, so they will be more cautious this year. Some are predicting a white-collar recession as companies cut back and lay off employees, which could impact demand for homes in lower luxury home price points.
“ THE LUXURY SECTOR WILL BE RESILIENT BECAUSE OF THE [TOP] 20% WHO CONTINUE TO BUY.”HINSDALE - 844 S. WASHINGTON STREET DMG represented the Seller
To some extent, many affluent consumers have been psychologically impacted by the economic concerns of the moment. They also don’t want to be seen as ostentatious at a time when there is suffering or cutting back.
The net of it all, though, is that the luxury sector will be resilient because of that 20% who continues to buy. They just might choose to invest less in luxury goods, and more in the areas of wellness/health, travel and leisure, and fitness/ nutrition.
In what ways do you see younger generations of luxury consumers impacting the market?
They want luxury brands to be ethical, charitable, and sustainable. The company must have good values – be socially responsible, treat their employees with respect, and contribute to good causes. They like to see companies not just talking about it, but taking action. They are more discerning about these things. They are not necessarily willing to pay more for it – at least not yet.
The other way I see younger affluent consumers impacting the market is their focus on longevity. Much earlier in life, affluent consumers are becoming aware of good health, nutrition, wellness, and beauty. They are taking care of themselves at a much earlier age.
What do you think will be affluent consumers’ top priorities for 2023?
I think some will be worried about their jobs – especially younger consumers – so they will temper their expenditures. Their priorities will be health, wellness, and fitness, followed by travel, leisure, and technology that enhances their lives. There is a lot more discernment in luxury goods categories–like, “How many handbags or watches do I need?”
They are operating from a far greater sense of vulnerability than before because of COVID-19. Their lives were also completely upended by the pandemic. Perhaps for the first time, they felt like they had an uncontrollable future. These experiences have generated a greater sense of connectedness to the world. They want to be good citizens and not be so ostentatious with their spending. That is the one commonality I see across all generations of HNW individuals. There is this sense among them, “I’m lucky and very fortunate in my life, and I need to be generous, kind, and emotionally intelligent.” Relationships matter to them more than ever.
How do you see the HNW mindset evolving this year, especially when it comes to homebuying?
Homebuying may slow down this year. There is a sense of caution in the market. Buyers don’t want to be the ones who bought at the top of the market. Sellers, on the other hand, are afraid of selling their primary home and having to go out and find another home, which will be more expensive. So they’re staying put. They are, however, buying second and third homes – especially UHNW individuals.
We noted the multiple-home ownership trend in The Trend Report 2022. What’s your take on why they’re amassing multiple homes?
If you’re an UHNW individual, you would rather go to another home of yours than a hotel. You want to share your home with your tribe. Some may even have their own private property exchanges amongst their friends.
Another popular trend: a lot of wealthy individuals are buying a home where their kids live. It may not even be in a traditional luxury center. They could have their primary residence in Naples, Florida, a second house in Nantucket, but their kids live in Buffalo, New York – so they buy a condo there that doesn’t need to be maintained just so they have their own private place to stay when they visit.
Younger people are also staying in the home longer. There is a stat – 40% of young adults, aged 29 and younger – still live at home.2 Parents need to make that work, so they may need a larger primary home with enough separation, or they purchase a house in another location as a getaway. They’re also renovating and building extensions on their existing homes to accommodate all the kids and the grandkids. Multi-generational living has become a significant driver for the affluent demographic.
Going back to the idea of caution, what would you say to a HNW seller who is wary about putting their home on the market this year?
Live your life. If you have that kind of money, it isn’t as important as doing what’s best for your life, in terms of the joy of your life and happiness. Life doesn’t last forever, so you have to gauge your enjoyment against the monetary consideration. What’s going to bring you joy?
Do you think the “live for the moment” attitudes that arose during the pandemic are still present?
If you have money and are of a certain age, you likely still have this mindset. You know that everything can change in a New York minute, so you are living for now.
If you are younger, you are more cautious because you have a much bigger time horizon. Millennials and GenZ also tend to be much more conservative with their purchases. They’ve lived through events like 9/11, the global recession in 2008, and the pandemic in 2020. These events have impacted their ability to accumulate wealth, and they are nowhere near where they should be in their wealth profiles compared to what Boomers had accumulated at their ages.
“ MULTIGENERATIONAL LIVING HAS BECOME A SIGNIFICANT DRIVER FOR THE AFFLUENT DEMOGRAPHIC.”WESTERN SPRINGS - 1123 PIN OAK DRIVE DMG represented the Seller
Where will the affluent be looking to put their money this year?
People will come back into the stock market slowly. If you are ultra-affluent, chances are, you are welldiversified. You’re putting your money into equity, capital investments, startups, and alternative investments like wine, art, etc.
During inflationary times, the wealthy tend to invest in goods that hold their value and appreciate over time – vintage cars, wines, and art. Real estate trust funds will be another area for investment opportunity.
What is your expectation for how their emotional needs might be changing, and how do you see that potentially playing out in real estate? Because homes are now our cocoons and emotional centers, empathy, generosity, and creativity need to be the values of the modern real estate agent.
Going the extra mile and doing that special thing for your clients helps cement that relationship. Real estate agents need to remember that they are not in a product service business; they are in a human relationship business.
Final thoughts about 2023?
The U.S. economy is already showing signs of resilience despite recessionary fears, and we know that the luxury market is a resilient sector. Even if there is a momentary downturn this year, the wealthy will likely help lead us out of it. A tremendous amount of innovation can also occur in moments of challenge, as we saw during the pandemic. I’m very optimistic about the future for luxury.
The Vision Survey gathers on-the-ground information from Coldwell Banker Global Luxury® Property Specialists who represent the top 10% of properties in their local markets.
This year, The Report surveyed over 600 Luxury Property Specialists around the world to understand where current and future purchasing trends were headed as the luxury housing market begins to rebalance after the COVID-19 homebuying boom.
Their message was clear: the market is normalizing and it’s more important than ever for real estate professionals to go the extra mile when it comes to serving the needs of HNW clientele.
Luxury Property Specialists say they are already getting creative. Their top picks for networking strategies are curating their own “favorite things” direct mail campaigns, hosting a private event for their VIP clients, and using trending social platforms like TikTok. For showings, some agents will be looking to pull out all the stops to make their clients feel special this year – whether it’s tapping into the most sought-out designers and decorators to stage a home or creating a special experience for a potential buyer. Most (about 54%) say they plan to stay connected with their clients via regular check-in calls or texts.
• Agent sentiment remains upbeat in spite of challenges.
• Scales tilt in buyers’ favor, but sellers still hold the advantage.
• Demand from out-of-state buyers expected to be strongest.
• High-end home prices expected to remain relatively stable annually.
• Primary home purchases, not secondary homes, will lead the market.
• Location is driving decisions, but move-in ready homes are a priority.
• “Have-it-all” properties with the perfect location, home condition, and amenities hit peak demand.
“ OVER 600 LUXURY PROPERTY SPECIALISTS WERE SURVEYED TO UNDERSTAND CURRENT AND FUTURE PURCHASING TRENDS.”
Higher interest rates and a looming recession continue to inject caution into the high-end residential market. An overwhelming majority (63%) of Luxury Property Specialists said that these were the two most common reasons for their clients pausing their buying or selling plans.
HNW clients also appear to be sensitive to stock market declines as Wall Street ended 2022 with its largest annual percentage drop since 2008.3 High home prices and inflation were less of a concern.
17.5%
CONCERNS
Concerns
6.5%
13.2%
35.0%
27.8%
Rising interest rates
Looming recession
Stock market declines
High home prices
Inflation
Happening concurrently with consumer caution, regional differences and inconsistent market conditions have made it difficult for some buyers and sellers to adjust to their new reality. The majority of Luxury Property Specialists indicated that their greatest 2023 challenge is sellers having outdated expectations based on market conditions that were present during the pandemic homebuying boom.
Meanwhile, most Luxury Property Specialists said that their greatest challenge on the purchasing side is buyers waiting for significant price declines. While inventory levels may be improving in some markets, many of the hottest markets are still plagued by low inventory – presenting challenges for both sellers and buyers.
Too many buyers are chasing too little desirable inventory, whereas sellers fear they won’t be able to find a replacement property should they list their home, which only contributes further to low supply.
Lack
Properties not meeting search criteria (price, size, location, condition, etc.)
Sellers won’t negotiate
SELLER CHALLENGES IN 2023
Sellers don’t need to sell Seller hesitancy for financial reasons
Seller fears of not being able to find a replacement home if they sell
Outdated expectations based on 2020-2021 market conditions
“ MANY OF THE HOTTEST MARKETS ARE STILL PLAGUED BY LOW INVENTORY – PRESENTING CHALLENGES FOR BOTH SELLERS AND BUYERS.”
Despite these challenges, Luxury Property Specialists remain generally upbeat about the high-end residential property market. Most said that they expect demand to stay the same from 2023 to 2024. More than half also said that they expect 2023 luxury home prices to remain flat or up slightly from 2022.
After two years of bidding wars, low housing supply, and soaring prices, many Luxury Property Specialists surveyed said market conditions for buyers would be slightly better in 2023. More than a third rated market conditions for buyers as fair and 32% rated them as good. Still, another 30% of them said that conditions would still be challenging for buyers – a sign that not all markets are equal.
Buyers may be regaining some negotiating power, but sellers still have the upper hand in many housing markets. Over 75% of Luxury Property Specialists said that market conditions would be either fair or good for sellers in 2023.
32.0% 37.1% 30.9%
Good Fair Challenging
37.4% 38.2% 24.3%
Good Fair Challenging
Did the real estate golden rule, “location, location, location,” get disrupted after COVID-19 made it possible for more people to live and work from anywhere? According to Luxury Property Specialists, the answer is…no, but it’s complicated.
More than half said that property location is still the most important factor driving their clients’ decisionmaking process for both primary and secondary homes. However, one in four said home condition and amenities are the most important.
This trend appeared again when asked what types of luxury properties are highest in demand. Half of the respondents said properties based on location were the most desirable, followed by nearly a quarter that claimed move-in-ready homes were most soughtafter.
Several respondents indicated that hybrid properties that offer a combination of location, home condition, price, size, amenities, or views were also highly soughtafter in their markets. A “have-it-all” mentality could become a larger influence in the high-end residential market this year as buyers flex their leverage and become more selective, refusing to settle for anything less than the perfect property that checks all of their boxes.
“ MORE THAN HALF SAID THAT PROPERTY LOCATION IS STILL THE MOST IMPORTANT FACTOR.”
Welcome to The List 2023: our collection of the top trends, values, and preferences influencing HNW homebuyers and sellers.
We asked over 600 Luxury Property Specialists and they told us what’s top of mind for their clients this year. What are the latest high-end buying trends, what’s mostwanted when it comes to home amenities, what defines a dream home today, and what tech amenities do they think have the most value today? The List explores everything from what’s currently shaping their clients’ real estate decisions (lifestyle changes still win the day) to the qualities their clients most want in a luxury real estate professional (think integrity and credibility).
BONITA SPRINGS - 1500 PELICAN AVENUE DMG represented the Seller and Buyer
1.
2. 3.
TOP LUXURY REAL ESTATE TRENDS
Top Luxury Real Estate Trends
Must-Have Home Amenities
2.
3.
Indoor-outdoor living spaces
Chef ’s kitchen with the latest features Breathtaking views
1.
Home automation systems
Smart, energy-efficient appliances EV charging stations
1.
Open floor plan
Bespoke architectural elements
Neutral color palettes
1.
Entrepreneurs
Doctors/lawyers Tech Experts
1.
High creditability and visibility
Unparalleled communication Local knowledge
Source: Coldwell Banker Global Luxury® Property Specialists Survey 2023
The market is in flux, so what can we expect during this transitional year? Certainly, the market has evolved from the red-hot conditions seen over the last few years. Does it indicate a dire market to come, though? Likely not. In the luxury world, the data paints a picture of a changing market– but not one without opportunity, for buyers or for sellers.
As always, and perhaps even more so than in recent years, the key to success in 2023 will lie in agents’ hands and, primarily, their ability to network, market, and keep their fingers on the pulse of their own unique communities.
As Jade Mills, of Coldwell Banker Realty in Beverly Hills, put it, “Think of 2023 as the year we come back to normalcy. Conditions will be different, but opportunity will still be there for those who want to seize it.”
“ THE LUXURY REAL ESTATE MARKET IS CURRENTLY IN FLUX.”DOWNERS GROVE - 5319 BLODGETT AVENUE DMG represented the Seller
Though there is no crystal ball to predict the future, one thing is all but certain: Buyers will not face the uphill battle they did over the last few years in 2023.
Luxury inventory rose significantly during the second quarter of 2022, easing pressure and reducing competition for eager buyers. In 2023, inventory levels are a wild card, but many housing forecasts are calling for an increase.
Despite these headwinds, though, buyers will not have a waterfall of options — just more than in the previous two years. According to the Institute for Luxury Home Marketing, current inventory levels are about 25% below 2018-2019 averages, and many consumers will be hesitant to list as their investment portfolios waver and economic uncertainty ensues.
If mortgage rates remain high, some may also hold on to their properties to retain their existing low rates. According to data and analytics firm Black Knight, around 90% of mortgage borrowers have rates under 5%.4 Meanwhile, average 30-year rates have sat at 6% or above since September, and Realtor.com projects mortgage rates will average 7.4% in 2023, trickling down to 7.1% by 2023’s year-end.5
Still, even slightly more inventory will mean more negotiations and, more than likely, longer times on market, especially for homes not expertly marketed, staged, and prepped.
“Buyers are going to have a little more power in the luxury market this year,” said Liz Gehringer, President of Coldwell Banker Affiliate Business and Chief Operating Officer of Coldwell Banker Real Estate LLC. “Balance is coming back into view.”
Thanks to this added power, buyers are apt to be more discerning when shopping for a home, and pricing will — and has already started to — reflect this.
The luxury median sale-price-to-list-price ratio (SP/LP%) sat at just over 97% at the end of 2022. While this is down from the 100% median seen throughout 2021, it’s still not back to pre-pandemic levels, indicating a cooling market but not an allout buyers’ market in the least.
The exception lies in a handful of metros, where SP/LP% has declined 5% to 10% (or more). These include previously booming spots like the East Bay area, Seattle, San Francisco, Silicon Valley, and Austin. In the remainder of cities, it’s simply a more balanced market coming into view. National Association of Realtors’ Chief Economist Lawrence Yun said as much in his recent 2023 forecast.
“After a big boom over the past two years, there will essentially be no change nationally [in home prices],” the trade group’s chief economist said. “Half of the country may experience small price gains, while the other half may see slight price declines.6
Fortunately, the majority of luxury agents don’t project major price declines in their areas. According to our recent survey of over 600 Coldwell Banker Luxury Property Specialists, 61% expect prices to remain flat or even rise modestly this year.
“ HALF OF THE COUNTRY MAY EXPERIENCE SMALL PRICE GAINS, WHILE THE OTHER HALF MAY SEE SLIGHT PRICE DECLINES.”
Regardless of where prices head, “The days of expecting overlisting offers are likely over,” Gehringer said. “In most places, you can expect a pretty even playing field.”
Luxury Property Specialists largely agree. About 69% predict 2023 market conditions will be either good or fair for buyers; just slightly more — around 75% — predict the same for sellers.
It’s close to balanced, but the key is in the stark about-face from past years. Sellers have become accustomed to bidding wars, breakneck selling speeds, and endless negotiating power. Now that buyers are gaining some of that power back — both in negotiations and in the properties they have to choose from — luxury sellers will need to adjust accordingly.
That doesn’t necessarily mean bargain-basement pricing or thousands in concessions, but coming to the table ready and willing to negotiate will be key.
“I think their negotiations are going to be a bit more evenly matched this year,” Gehringer said. “Don’t expect any one party to dominate the other.”
Quality representation will also make all the difference. With buyers more discerning and hesitant, sellers who engage capable, skilled, and connected agents will rise to the top.
“Using an agent with a deep network and the ability to match a property with the right kinds of buyers is going to be the key to selling success in 2023,” said Michael Altneu, Vice President of Global Luxury for Coldwell Banker Real Estate LLC. “Standout staging and marketing will be vital, too.”
Survey data supports as much. According to the National Association of Realtors, eight in 10 buyers’ agents say staging makes it easier for consumers to visualize a home.7 More importantly, most sellers’ agents say staging directly impacts the bottom line. Over 40% say staging increases offers by 1% to 10%, while 9% say the jump is 11% to 20% — a significant amount of cash on a luxury transaction.
In addition to staging, agents can also recommend key upgrades to make properties more marketable for today’s choosy buyers. Our survey shows that luxury buyers put high stock in chef’s kitchens, indoor-outdoor living spaces, top-notch views, and privacy. Well-appointed home offices are also in high demand.
“Understanding how to cater to consumer preferences is more critical today than ever,” said Dawn McKenna, founder of the Dawn McKenna Group.
All real estate is local, but the variability between markets will be palpable in 2023. With prices trending up in some, down in others, and inflation impacting sectors and geographic areas very differently, luxury buyers are likely to be on the move this year.
Realtor.com shows that cross-market demand— or buyers shopping for homes outside their local area — reached record levels in 2022, accounting for nearly 61% of the site’s listing views. This year, the trend’s likely here to stay.8
With the continued work-from-home arrangements many HNW individuals enjoy — not to mention the more discerning approach they’re now able to take to home shopping, 2023 will be the story of migration and relocation in luxury real estate.
“We’re going to see a lot of shifting preferences as far as location goes,” Altneu said. “While these probably won’t be price-driven, you can expect luxury buyers to seek the most well-suited properties they can find — no matter where they might be located.”
Agents appear to be poised for these changing trends. Only a third of luxury agents expect the majority of their sales to come from local buyers. Four in 10 think out-of-state buyers will make up the bulk of their clientele, while nearly a quarter expect purchases from other parts of their state.
However you slice it, 2023 is ushering in a changing luxury market, one where agent representation matters more than ever. The network, expertise, and local knowledge an agent brings will play a critical role in just how successful sellers and buyers can be.
As Altneu noted, “The market’s shifting, but with the right agent on their side, any luxury consumer can achieve their goals in 2023.”
“ 2023 IS USHERING IN A CHANGING LUXURY MARKET, ONE WHERE AGENT REPRESENTATION MATTERS MORE THAN EVER.”
Review DMG's niche markets in the Chicagoland, Lake Geneva, Naples, New Buffalo and Park City to gain insights about the opportunities, now and in the future, for appreciation and growth in these luxury real estate markets.
To determine what really influences an individual’s decision to buy in each of the luxury markets, where DMG specializes, Dawn McKenna consulted with her team to find the answers.
Questions were asked, such as does the lifestyle factor influence purchase decisions, or is the type of home more important? Is it proximity to amenities, or is it the geographical advantage of accessibility to schools, business or airports that influence buyers most?
For a more statistical understanding of the 20222023 trends for both single-family and attached homes in the top 10% of their luxury markets, the monthly inventory and sold totals were examined together with the median sold price.
While statistics show trends, it is the DMG agents who truly provided the local insight, knowledge and understanding of the nuances in each of their marketplaces, revealing a more complete picture of the factors that are truly shaping purchase decisions among modern day luxury homebuyers.
There is a new energy in Chicago, from a city that experienced one of the biggest exoduses of its population during the pandemic, the return and popularity of this metropolis has come full circle. A return to its former glory has residents once more embracing the diversity of its cultural, arts, entertainment, sports, food and ethnic scenes.
The cost of living in Chicago may have risen, like most major cities, but comparatively it remains relatively affordable, and this includes its home prices. These factors make Chicago attractive and probably why it has the 4th highest concentration of Fortune 500 companies in the U.S.
“We are seeing a big diversity of buyers,” said Caitlin Skogsbergh of DMG’s Chicago, IL office, “including people moving from Chicago’s suburbs, cities such as Boston, Minneapolis, and Detroit, as well as internationally from Canada, India, Russia and Ireland. Chicago as a business center is growing and offering new opportunities that are attracting a lot of attention.”
Diversity is not just where people are moving from, but in the types of buyers as well as their preferences it would seem. “From empty nesters downsizing from the suburbs, second homeowners needing a work-week pied-a-terre, young couples and families returning to office life, to investors and entrepreneurs looking for an investment opportunity, there is definitely an influx of people wanting to purchase a property in downtown Chicago again,” said Joy Larkin of DMG’s Chicago, IL office.
Many returning and new residents are looking to purchase, rather than rent, for several reasons. Rental properties have become scarce, rental costs have climbed exponentially, and for those who expect to stay in this city for a long-time, the economics of ownership justify this decision, despite higher mortgage rates.
“The increase of interest rates by the third quarter of 2022 did see the demand slow as even the wealthy took stock of its impacts on their plans”, explained Tory Rezin of DMG’s Chicago, IL office,
“but now this factor has normalized in many buyers’ minds and combined with companies expecting their employees, including the CEO, to return to the office we have seen a rise in buyer activity month over month since the start of 2023.”
Today’s luxury real estate market sees high demand and low inventory driving prices as well as buyer and seller decisions,
The major difference from last year is a change in demand for more space. Today’s buyer is not so much concerned with larger space but in the location and access to both their office and local amenities. Inventory in River North, Gold Coast and West Loop has all but disappeared – where it had sat for months during the pandemic – as buyers recognized early on in 2023, they could buy at more affordable prices. However, like the highly desirable areas of Lincoln Park, although inventory is likely to increase in the next quarter of 2023 it is anticipated that prices will rise, especially for move-in ready
properties with desirable amenities, as demand is growing at a faster rate than new inventory enters the market.
“Affluent buyers are still looking for properties that offer them a plethora of amenities, whether its access to shops, restaurants and outdoor spaces or apartments with five-star hotel-style room service, in-house spas, and roof top gardens’, shared Bari (Kesner) Mill, also from DMG’s Chicago, IL office, “but their main concern is finding a property that offers them safety and security.”
Downtown Chicago may have seen its fair share of troubles in the last few years, but rest assured there is a concerted effort from local government levels to property developers to address these concerns. Given this and the increased level of development activity, it is anticipated that downtown Chicago will continue to see high demand and price growth over the next five years.
“There has been a distinct change in the Hinsdale and Burr Ridge real estate markets over the last few years,” stated Dawn McKenna. “It used to be that I would carry over 120 listings, while today this is the total amount of properties listed for sale.”
Lack of inventory is a huge challenge for sales of luxury properties in Hinsdale, Burr Ridge, and the surrounding communities. Even though levels were already exceedingly low in 2022, the number of homes for sale in the first quarter of 2023 has been nearly 50% lower still. “Very little new construction is happening due to increasing building and labor costs. With builders not buying, fewer vacant lots are available for sale. As for existing homes, fewer people are selling because the mortgage rate they would pay for their next home will be more than double what they pay
now. All of this combines to cause a significant inventory shortage,” explained Dawn.
This shortage comes as Hinsdale, Burr Ridge, and their northern neighbor, Oak Brook, ever popular for their quintessential village lifestyle, incredible amenities, and easy commute to Chicago, are experiencing increasing demand from a new demographic – doctors, educators, and related professionals. “With the constant growth of the western suburbs, the demand for medical and educational institutions out west has also exploded. This has led to an extraordinary growth in medial- and educational-related companies moving here or adding satellite offices in the western burbs,” said Dawn. “One in every three homes I have sold in the last year has been to a doctor or a professional in the medical or educational sector.”
Rather than worry or complain, Dawn and her team attack this issue with the creativity and innovation that have always hallmarks of Dawn’s business. “One of the most challenging situations is when buyers and sellers find themselves in a codependent chain,” explained Dawn. “This happens when, for example, my buyer can’t buy until they sell their home, but the potential buyer of their home can’t buy until they sell their home, and so on like dominoes waiting to fall.” Unlike most agents, who typically throw up their hands and wait for the cycle to break itself, Dawn and her team aggressively look for ways to break the cycle. One way is to find one of the parties a rental or renter. “You need one of the dominoes to fall, and having one party agree to rent can often cause that first domino to fall.” This is not easy because rental inventory is low, as well. “But rentals are a faster market so if you’re alert and aggressive, you can find a solution,” explains Dawn.
Another way Dawn breaks the cycle is to find my clients a temporary, often lower priced, home that they can buy and park in until she can help them find their long-term solution. In Dawn’s experience in five states and thousands of deals, the ‘temporary buy’ solution often works in two ways. “Not only does the family get settled, get into schools, etc., many end up keeping the temporary home as a rental investment,” shared Dawn. “The extra income has been significant for many of my clients, who especially appreciate the consistency of rental
income and the opportunity for appreciation in the property’s value given the instability of the stock market.”
While temporary solutions help in this challenging market, Dawn has also encouraged buyers to expand their searches, especially looking a little further away from the center of town. In doing so, Dawn has a better chance to find her buyers a home that fits their requirements, including one which is high on most of her clients’ lists – more land.
At times like this, Dawn simply needs to convince some buyers to alter their perspective, especially when it comes to finding ‘move in ready’ homes. “Buyers sometimes need to be more realistic with the move-in ready demand,” said Dawn. “If I can help them see what a home could be and help find the resources to make that vision a reality, it can open up many more opportunities in a timely manner.”
In the end, people will always want to move to the best suburbs. So, the inventory pressure will not be alleviated until there is more inventory in the higher end of the market. But until mortgage rates go down or the stock market goes way up, Dawn expects that the Hinsdale and Burr Ridge markets will continue to witness higher demand than supply, which means Dawn and her team will continue to be invaluable.
“We continue to see inventory decline and demand increase for luxury properties in Western Springs and La Grange,” stated Lauren Walz of DMG’s Western Springs and La Grange, IL office. “This continues put an upward pressure on prices, and although buyers have become notably more price conscious, they are now more likely to compromise their requirements than get into bidding wars.”
There was a slight uptick in inventory levels during the second quarter of 2022, but until February 2023 the number of listings entering the market continued to decline. While the number of sales also fell, this was related to the lack of inventory rather than declining demand. In fact, a bump of inventory in February 2023 resulted in a jump in sales in March 2023.
“We are still seeing a strong influx of potential buyers coming from outside the immediate area, but there has been a shift in the demographic looking to purchase our higher-end homes” shared Lauren. “In previous few years, the demographic was often younger dual-income families, with or without children, relocating out of the city, but gradually I have noticed the age of buyers trending upwards.”
This change could be for several factors including, but certainly not limited to, grandparents moving back to be closer and of more help for their grandchildren, slightly older millennials or Gen-Xers who may be returning to the city for work but are ready to commute, as well as those who either work from home or employed locally in one of the new corporate satellite locations popping up throughout the suburbs.
“Mid-westerns are traditionally very familyorientated and due to the pandemic, we have seen a significant uptick in families moving closer together,” explained Lauren. “Western Springs and its surrounding communities offer a unique blend of family-friendly neighborhoods, great schools, and an easy commute into the city or nearby hub.”
However, the shortfall of inventory is proving challenging even for those willing to compromise, whether it’s the location, size or even the condition of the property.
“Buyers are still looking for move-in ready, but I have seen a shift as they realize that in order to buy here, they are going to have to compromise, even if budget isn’t their concern,” said Lauren. “Whether it’s moving further away from the city center, buying a home that needs renovations or continuing to wait.”
Realizing that the waiting game might not be the best decision, with forecasts of new interest rates
increases and inventory levels not likely to change significantly, Lauren focuses on finding solutions that will help both her buyers and sellers navigate this market.
“Staying at the forefront of the market is the most strategic way I can help my clients,” shared Lauren. “Whether it’s negotiating a longer closing term or rent back situation to give them time to find a new home, helping them find the right renovation team, locating another property to provide an interim solution or connecting with all my contacts, sources and resources to discover properties that are not currently listed for sale but will accept offers, my focus is to facilitate their needs.”
Western Springs and La Grange as well as the surrounding communities have their own natural vibrancy, one that has long attracted those who were raised or lived in them. If inventory continues to remain low, despite increasing interest rates, then it’s likely those looking to return to their roots may be in for a challenge for the foreseeable future.
Chicagoland’s North Shore offers an array of property types and housing options in its many communities that line the shores of Lake Michigan. The lack of inventory currently available in these markets, especially when compared to the first half of 2022 – up to a third lower, is forcing buyers to expand their home-search geography and be more open minded to different housing styles.
The North Shore remains highly desirable to younger and older demographics alike. Empty nesters are moving to the area to be closer to their children and grandkids, and couples without children, who can work from home, are choosing to keep the lifestyle they adopted during the pandemic. The city of Chicago remains the number one location from which buyers are migrating, but the area is also popular for people relocating from out of state for work in Chicago.
Low inventory and high demand have been driving the market for several years, but there is a
difference in today’s market due to the increasing, ever-volatile interest rates.
“I have found buyers in today’s market to be a bit more price sensitive; I am having more conversations regarding interest rates and the impact on monthly payments this year than last year,” stated Katie Moor of DMG’s Winnetka, IL office.
“Due to the limited inventory, buyers are now looking at all available homes in a given price point, regardless of style, and have been more willing to expand the geography of their search area,” stated Annie Royster Lenzke of DMG’s Lake Forest, IL office.
The appeal of the North Shore is its many diverse communities that do afford the opportunity for buyers to stay within their budgeted price point if they are willing to look at other locations or a little outside their initial preference, and/or a different type or size of property.
“We were hoping to see a return of the typical yearly trends, with an uptick of inventory available early spring,” stated Annie. “Instead, we have noticed that everything has been delayed slightly. The lack of inventory is creating concern as to where sellers would move after selling.”
Sellers are leveraging the lack of inventory to negotiate a longer closing date. This allows them the time to find another home, not have to move until the school year finishes, or even simply to enjoy the upcoming summer months before moving out of state. Market time remains at record lows with homes that are priced right selling quickly, with multiple offers.
“We are even seeing offers being negotiated that allow the seller to rent back for a few months, after closing, often free of charge,” explained Katie.
Expectations for the North Shore are that demand will remain higher than supply, as many sellers admit their desire to move is based more on want
than need and are not prepared to exchange their low mortgage costs for the current higher rates.
Equally, demand will continue to be strong as buyers recognize the high desirability of living in these communities. Homes hold their values in family-orientated towns that also offer easy access to recreation and all the amenities of Chicago a short distance away.
While turnkey properties will remain a high priority for many, for other buyers the expectations are that they will start to look at properties that need a renovation in order to establish a foothold in their preferred community.
“When inventory is so low, it’s not surprising that we are seeing changes in both the buyer and seller decision processes,” said Katie. “For us, it becomes even more important to have a deep and balanced understanding of the market so we can provide both parties the best opportunity to move forward with their intentions.”
In September 2022 one of the worst hurricanes Naples has experienced hit home. But with much the same attitude as they had towards the pandemic, the citizens of this tight-knit community worked together to ensure life would continue as it always had. Naples has bounced back relatively quickly and has returned to its desirable location status.
This is not to say that many of its citizens were not badly affected, homes were lost or irreplicably damaged, but more that the city kept its heart, learning some valuable lessons, which they are implementing during this period of rebuilding.
However, turn a residential corner and the devastation, in particular, of older homes is still obvious. Turn another corner and newer properties built within current code requirements have stood the test of Hurricane Ian’s ire. In some locations visitors may even question if there was any damage.
“Despite Hurricane Ian, economic uncertainty and rising interest rates, Naples saw a slightly delayed but nevertheless busy winter season,” explained Victoria Clarke-Payton of DMG’s Naples, FL office. “Clients were initially more hesitant and cautious, but the number of sales in the first quarter of 2023 was pretty much on par, if not slightly higher, compared to the first quarter of 2022.”
Inventory levels are considerably higher comparatively year-over-year, but these increased numbers are most likely resulting from the negative impact of the hurricane. Some people will always react at times of natural disasters or find themselves forced to sell. Additionally, inventory levels increased, especially for apartments, due to a steady influx of new development entering the market over the last six months.
“We are still seeing a steady stream of buyers,” said Wendy Garner of DMG’s Naples, FL office. “Approximately half are investors looking to capitalize on the appreciating real estate market,
whether they use it purely for rental and/or parttime, and the other half are buyers with pent-up demand.”
Buyers who have been waiting to enter the market, for whatever reason, are typically not seeing prices trend down and noting that demand is once more on the rise are appreciating that they need to, at very least, find a “placeholder” property. While there hasn’t been a significant surge in demand, it is anticipated that this growth will be enough to keep prices steadily increasing and inventory below traditional levels.
“Younger buyers, in particular, are growing in number and purchasing properties that allow them to both rent and use at their discretion,” explained Ardel McKenna of DMG’s Naples, FL office. “Ultimately many have the goal of moving to Naples within the next 3-5 years but want to realize the financial benefits of getting a foothold in the market today.”
Many pre-sale developers have also reported that the average age of their buyers has dropped from mid-60s to upper-40s, over the last few years, as the Naples’ lifestyle has become highly appealing to this younger demographic.
“More people are moving from the west, mostly California, and after comparing the multitude of locations in Florida many are choosing Naples for the lifestyle it offers,” stated Maureen Runzel of DMG Naples, FL. “Lower crime rates, less density and a sense of living in a vacation town but one that still provides access to all the amenities of city life is the big draw.”
The team has coined a phrase that rings true for many of their buyers “urban-lite.” Whether they are from the east or west coast, Midwest or out of country, Naples’ charm and way of life, not to mention the fortitude of its residents, is inspiring relocation of a new generation.
Similar to the shifting demographic, Naples is also changing but it’s doing so mindfully, ensuring the reasons people move here are not undermined. Rather than building upwards, development is seeing new pockets and enclaves of luxury homes moving eastward, towards the airport. Equally, amenities such as high-end shopping malls, are moving east too, to accommodate this new demand.
“These new communities have provided opportunity for those looking to invest in the early stages of building,” explained Ashley Baird of DMG’s Naples office. “As these areas become more desirable it is anticipated that they will likely see their investment continue to appreciate in value.”
Builders are also aware that less is more, and the demand for less density and larger floorplans is now commonplace – as is the flexibility of the use for the space. They are also aware of the concerns lingering from Hurricane Ian, so expect to see changes that cater for rising water levels as well as buildings to be further away from the water itself.
“In addition, buyers, especially second homeowners, are now looking for ‘lock and leave’ properties, so complexes that offer full maintenance service of the building and grounds have grown exceedingly popular,” shared Kathleen Thanas of DMG Naples, FL. “There is a comfort in knowing that any damage will be taken care of by your property management team.”
As always there is a mix of requirements from buyers in the current market, but equally Naples still offers a residential diversity to match. Even the negative impact of Hurricane Ian has already opened new opportunities as well as changed short and long-term plans.
“While some buyers and sellers don't want to have to worry about another catastrophic flood, MANY people are happy to take advantage of those who want to unload their beachfront properties,” shared Wendy.
Turnkey properties have become once again the hot ticket property item, driven exponentially by the demand of those whose homes were affected by the hurricane.
“Frustrated by the lack of rental properties available, many affluent buyers opted to simply purchase an additional property, with a view to resell or keep as a rental when their home has been restored,” explained Julie Danaher of DMG’s Naples, FL office.
While it’s still a slow process, mainly due to a lack of contractors available, opportunity also lies in the purchase of older homes destroyed during the hurricane.
“Many of these homes are now selling at lot value,” explained Victoria. “For those with an eye on the future, purchasing these properties could offer a great investment opportunity, especially once the pressure on the building industry eases.”
Despite the challenges of 2022, it is without a doubt that the DMG team are in agreement that Naples will continue to see more people relocate to its warm, sunny climate and enjoy real estate investment growth opportunities. In return they will be provided with a cosmopolitan lifestyle full of rich and varied amenities and activities.
As far back as the late 1800s, early 1900s, Lake Geneva became a popular destination for Chicago’s wealthy. Today, less than a two hour drive from downtown Chicago, luxury homes and estates are still very much part of the framework of the communities surrounding Lake Geneva.
The affluent remain highly attracted to this destination that offers stunning vistas and natural beauty as well as historic architecture and an elaborate mix of restaurants, activities and adventures.
“Lake Geneva was originally thought of as a summer destination for the families of wealthy Chicagoans,” explained Dan Hodgman of DMG’s Lake Geneva, WI office, “but since the onset of the pandemic we have seen a significant change, with a broad range of demographics now choosing
to make it their home year round, as well as a secondary home destination.”
Over the last few years Lake Geneva experienced one of its strongest real estate markets, but one that also saw a significant decrease in the amount of inventory available to purchase. Even during the quieter months of the last quarter in 2022, the demand did not diminish to the same degree as comparative secondary home markets.
That trend remains true in the current market, with luxury properties seeing multiple offers and overasking prices as inventory remains historically low. The lack of sales is more attributable to this phenom than a decline in demand – especially for move-in ready properties.
“If a property is turnkey, lakeside or even offers quick lake access, and checks all the amenity boxes,
then it will sell for a premium,” says Ellie Money of DMG’s Lake Geneva, WI office. “The affluent are truly motivated if they can take possession and literally move in – we are even seeing more offers asking for the furniture to be included, especially when its professionally staged.”
For those looking to move to the Lake Geneva area the market still offers opportunities despite low inventory levels. Buyers with deeper pockets and highly specific requirements will probably have to wait or be ready to make an immediate offer.
“Cash is very much king in Lake Geneva,” shared Dan, “the majority of our affluent buyers understand that making an offer without financial constraints is now key to buying a home here. Whether they chose to finance after the purchase is not relevant, they recognize the need to come prepared to move fast in order to secure a property.”
But for those who are ready to either compromise on their wish list, take on a renovation project or move further away from the lakes, not only could
these properties meet their price expectations but give them a greater selection.
“Lake Geneva is no longer just a mecca for the ultrawealthy looking for a second or vacation property, we are seeing increasing numbers of affluent buyers from all generations looking to move here full-time; whether they are downsizing, can work remotely or only need to go into the office once or twice a week,” explains Colleen Chandler of DMG’s Lake Geneva, WI office. “Being ready to compromise or find an interim property can secure them a home in the current market.”
The DMG team agree that Lake Geneva area will continue to attract many a Chicago buyer, no matter what their reasons for relocating, they are still not ready to move to more distant locations such as Florida. They still have connections to the city and the relatively easy commute affords them the opportunity to access the amenities of the city as well as attend to business or visit family and friends.
Harbor Country is still associated with being a precious hidden gem, despite its long history of being a summer playground, second home destination for some highly recognizable figures from the past and present, such as the Fords, Hemmingway and the Gambles and growing international reputation.
Appreciated as a second home destination for many Chicagoans for more than 100 years, it experienced exceptional and exponential growth during the pandemic which also resulted in substantial property price increases. This was further fueled by the many affluent buyers who chose to escape their big cities and purchase luxury homes in the varied and uniquely individual communities along this south-eastern stretch of Lake Michigan.
“For the last couple of years luxury properties have flown off the shelf and despite outside influences, such as interest rates and inflation, for most of 2022 inventory levels and sales have remained steadily in sync with each other – if inventory increases, so do sales,” stated Peggy Sayre of DMG’s New Buffalo, MI office. “In the current market, the lack of inventory is still proving challenging and properties that are move-in ready continue to see multiple offers and over asking price bids.”
Prices may have risen over the last few years and finding luxury properties for sale a lot more challenging, but comparatively to some of its competition like Cape Cod or Malibu, buying in Harbor Country is still relatively affordable, especially for those looking for a larger plot of land and are ready to do a tear-down or renovation.
Living on the lake or within easy access to it, obviously is a big draw for the affluent, but this coastal community attracts those in search of year round activity too. Boating, hunting, golf, skiing, hiking as well as a plethora of high-end restaurants and highly individual towns and villages with their own personalities have become part of the draw to move here.
“Harbor Country is no longer just a summer destination, its popularity, coupled the opportunity for many a Chicagoan to work from home, has seen homes become full-time residences,” said Peggy. “As more and more affluent chose to live here, we have seen a shift in their demands. If they owned a second home here previously, they are now trading up and buying homes with large estate sized lots. Some are tearing down their existing home while others are renovating or adding guest homes.”
There is also a change in the summer vacation demographic too, as Peggy explains “now we are seeing second and third generation families chose this as their summer retreat, and often families will buy properties next door, or just down the street from each other. Brothers, sisters and cousins are
bringing their young children here so that they can all grow-up and play together during the summer months.”
The popularity of Harbor Country has created its own problems too, as home prices escalate and inventory levels continue to fall, this has led to potential buyers using creative tactics to secure a property.
“I’m often in the situation of touring my buyers through a home using video conferencing, as many do not live here and have to almost buy sight unseen,” shared Peggy. “They also need to be extremely competitive, not just in the amount they bid, but in how they position their offer –cash buyers without contingencies who also offer longer closing or a rent-back situation (if the seller needs to find a new home) are just some of the considerations.
The future of luxury real estate ownership in Harbor Country seems to be strong, as it continues to appeal to a broad demographic as well as a highly affluent one.
Park City is now a far cry from its original roots as a silver mining town, although the town itself proudly embraces its heritage maintaining architectural features from mine shafts to a high street of storefronts that take you back to yesteryear. Firmly on the international map, after hosting the 2002 Olympic Winter Games, it is now a world-class ski resort attracting not just the avid skier, but the rich and famous too. As a result, it has gradually expanded to over 7,300 acres across the Rocky Mountain Range.
Not only has this mountain resort broken all expectations in its growth and international recognition it has become one of the top yearround adventure parks in the U.S. It draws new visitors and residents almost daily and, except for the original town, the opportunity for expansion is only restricted by natural elements in the surrounding verdant valley – and fortunately the careful management of its town planners.
“Park City is very much a melting pot of people transplanted from all parts of the U.S. and beyond,” stated Joy Larkin of DMG’s Park City, UT office. “But if I was to categorize our property buyers, it is the growth and diversity of our town that has cumulated them into three broad groups. The classic ski-in/ski-out vacation homeowner, the full-time resident whose needs are focused on and in the community, and the year-round amenity or activity buyer who visits often or stays for long periods of time.”
While Park City’s lifestyle of activity, clean air and immense space has been attracting new residents for many years, the pandemic exacerbated the relocation of those who already had a vacation property or previously visited, recognizing that it was a perfect escape. And these reasons still hold true for new residents who are seeking to make it home; whether part-time or full.
“Like many mountain resorts, Park City saw their inventory levels drop dramatically and prices
increase exponentially during the pandemic, and although there has been a slight increase in availability this is not a result of a lessening demand,” explained Joy. “Recognizing the desirability of this community, builders and developers, particularly of higher end homes, have created new pockets of luxury homes over the last few years – embracing the need for space and privacy that our affluent buyers seek.”
Despite recent price increases and the expansion of the luxury real estate market, Park City remains comparatively under-valued against ski resorts such as Vail, Aspen and even neighboring Deer Valley. The current increase of new and resale luxury properties available on the market is providing a little more breathing room for buyers and sellers alike and should help relieve the pent-up demand.
“I do not expect to see many of these luxury homes linger too long on the market – especially any turnkey properties as they are in high demand,”
shared Joy. “That being said, buyers are now more price conscious, and we are seeing over-priced homes remain on the market, whereas those priced in line with current prices are seeing lots of activity.”
While the main town, not only keeps its original charm with newer carefully designed condominium and resort properties still balancing the older home styles, and the expanding ski resort providing very high-end enclaves of ski-in/ski-out homes, growth into the valley, passed the highway from Salt Lake, embraces the new year round resident.
“These residents still want access to the ski hill, but no matter if they live here full-time or come at various time during the seasons, they want to enjoy the year-round activities that Park City offers,” confirmed Joy. “Whether its boating on the reservoir, fly fishing on the Provo River, golfing in their backyard, to white water rafting, mountain biking, hiking and even paddleboarding yoga in a 10,000 year old geothermal crater!”
The market for luxury rental properties has not slowed in the last year, if anything demand has continued to increase exponentially as people change course now the pandemic is firmly behind us. Whether that is returning to city life, relocating or putting on hold their property purchasing plans due to mortgage rates, economic concerns or simply not enough inventory. This has put an increased pressure on the supply of rental inventory which is simply not keeping up with demand.
“We are seeing record numbers of renters in bidding wars and, for example, offers up to $500 per month above asking for one bedroom rental apartments in Chicago’s most desirable locations,” stated Allie Cipra of DMG’s Chicago, IL office. “This has been further aggravated by the requirement for employees – from CEO’s downwards – to return to the office.”
We reported last year about the growing demand for rental properties, but even with the opening of new condo buildings and “trendy” locations such as West Loop, this increased supply has been negated by existing landlords, who hesitated to sell during the pandemic, now looking to cashin on the upswing of resale prices. Subsequently this is putting a further downward pressure rental inventory levels.
“What has changed significantly from 2022 is the demand for one bedroom condos,” said Maria Cali of DMG’s Chicago, IL office. “During the pandemic, renters who stayed in Chicago were more likely to move into two bedrooms as it allowed them to work from home. Now, as more people go back to work the decreased necessity for a second room as well as increasing rental rates has seen the demand for one bedroom condos return in full velocity.”
Those with extra capital, rather than getting into bidding wars, are looking to increase their
rental expenditure in exchange for more luxurious amenities and walkability to local amenities and even the office. Space is not of such importance so they are willing to compromise if they can find a new build with the latest high tech features and environmental infrastructure, not to mention security.
“Amenities are a must-have for all our luxury clients, but one of the biggest requirements is to have a 24-hour doorman with a sophisticated security system,” explained Maddie McMahon of DMG’s Chicago, IL office. “On the flip side amenities such as full-concierge service, dog runs, and garage space have risen to the top of many renters’ additional ‘must-have’ lists.”
Those moving to the suburbs of Chicago or destination markets such as Naples, Park City or lake country communities, will have experienced the demand for luxury rental properties on the increase too, and like the city see the supply significantly diminished compared to last year.
“The demand for luxury rental properties has created an opportunity for many of my wealthier clients, who are now purchasing properties specifically for a rental investment,” said Dawn McKenna, founder of DMG. “High rental returns have spurred investors as they are often able to achieve a greater return on their money than leaving it in the banking system.”
Luxury full-time rentals have also been depleted in many destination markets where they are either
purchased or removed from the market to become vacation rentals, second homes or even an interim home for buyers who are finding it challenging to find a new property to purchase, due to low resale inventory.
“As inventory becomes more challenging, I am seeing clients who are committed to leaving the city, sell their Chicago home and buy a tear down or vacant lot on which to build their forever home,” shared Peggy Sayre of DMG’s New Buffalo, MI office. “Whatever their reason to leave the city, they are not willing to wait to start their lives in Harbor Country, so they rent a luxury property until their new home is ready.”
In Naples, the luxury rental market both for investment and for those looking to rent while they relocate has always been strong.
“However, with the unfortunate arrival of Hurricane Ian in September 2022, a new demographic has been added to the rental market mix,” explains Jocelyn Lujen of DMG’s Naples, FL office. “For those who lost their home or waiting for renovations, the need to rent has become a necessity, as they make decisions for their future.”
It seems that wherever you turn, the luxury rental market is only reporting a growth in demand and a decline in supply. For investors, the opportunity is obvious as rental returns continue to prove advantageous, not to mention the return on the value of the property that will likely increase over the next five years.
DMG's in-depth research, knowledge and experience in working with and understanding the requirements of the affluent are the key components to knowing how to provide their exceptional service.
Building a thorough analytical approach to who the affluent are and how their income is generated, combined with what and where they are spending their money, has become a critical element in DMG’s strategic marketing platform. This drives DMG’s decisions on how to effectively market to buyers and sellers, while also ensuring that DMG can maximize the exposure of its property listings both locally and globally.
In addition, it helps DMG consistently evolve and adapt to today's constant changes, influences and opportunities, so that DMG can remain at the forefront of connecting the dots that ensure excellence in all aspects of their business.
DMG takes a 360° marketing approach to offer an impressive stage to its clients' homes, using both highly qualified in-house resources as well as leveraging the Coldwell Banker Global Luxury platform.
This gives DMG a truly borderless service that comes with a complete suite of tools designed to share the beauty of client properties with an affluent audience at all times, no matter where they happen to be in the world.
DMG creates cutting edge, strategic marketing that includes, but is not limited to:
DMG firmly believes the best real estate professionals, in luxury and well beyond, will always focus first and foremost on their role as trusted advisors.
Relocation and multiple homeownerships are two of the current and future top trends and DMG will continue to be well-versed on predictive factors beyond market statistics and comparables. This includes remaining up to speed on the latest developments, not simply in their markets of focus but, in the larger realm of macroeconomics, global fund flows, technological and legal innovation and consumer trends.
DMG now needs to be able to speak about other markets from a place of knowledge, while appreciating that they are the literal connections
to a community and the lifestyle it offers. The evolution of the luxury agent is going to be that of a lifestyle ambassador: where its understanding the school wait lists systems or local philanthropy, DMG will be focused on giving their clients an accurate picture of the community experience and settling-in process.
DMG will continue to employ a “surround sound” strategy of being present in the many facets of the affluent client’s life, from offering market research and information related to potential local and second home markets to extending the reach of clients’ philanthropic endeavors via their sphere of influence and assisting multiple generations through partnerships with family offices and wealth managers.
THROUGH 20 YEARS OF SETTING RECORDS, AND OVER $3 BILLION IN CAREER SALES, THE DAWN MCKENNA GROUP CONTINUES TO EXPAND THEIR REACH.
The Dawn McKenna Group is a member of an elite digital partnership, Global Collective. Formed in 2015, Global Collective is an invitation-only network of luxury agents from a variety of agencies and cities around the world, with over $50 billion in combined sales. Eighteen members have made the WSJ Top 100 in the last two years. The Dawn McKenna Group holds the exclusive right to operate a Luxury Presence website in all of their markets.
ANNA LEE
Austin, TX
Moreland Properties
ANTHONY MARGULEAS
Pacific Palisades, CA
Amalfi Estates
BARRY COHEN HOMES
Toronto, Canada
RE/MAX
BILL RUANE
El Segundo, CA
RE/MAX
BILLY McNAIR
Menlo Park, CA
Coldwell Banker
CAROLYN & JEFF SARSEN
Greenwich, CT Compass
CARRIE WELLS
Aspen, CO
Coldwell Banker
CHRIS ADLAM
Palos Verdes, CA
Sotheby's International Realty
DANA & JEFF
LUXURY HOMES
Hidden Hills, CA
Frontgate Real Estate
DARLENE STREIT
Palm Beach, FL
Corcoran
DAVID BANKS TEAM
Portland, OR
RE/MAX
DAWN McKENNA GROUP
Chicago, Lake Forest/Lake Bluff, Winnetka, IL; Lake Geneva, WI; New Buffalo, MI; Naples, FL; Park City, UT Coldwell Banker
GINGER MARTIN
Napa Valley, CA
Sotheby's International Realty
GRAY SAINT ONGE
Tucson, AZ Gray St Onge Real Estate
HAGEN BERGSTROM TEAM
Washington, D.C. Coldwell Banker
JADE MILLS ESTATES
Beverly Hills, CA Coldwell Banker
JOHN CORRALES GROUP
El Segundo, CA Compass
K. ANN BRIZOLIS
Rancho Santa Fe, CA
Sotheby's International Realty
KEVIN McDONALD
Sonoma, CA
Sotheby's International Realty
LAUREN FORBES GROUP
Hermosa Beach, CA Compass
MARY LU TUTHILL
Santa Monica, CA Coldwell Banker
MATTHEW BREITENBACH
Hamptons, NY Compass
NED WALLEY
Silverthorne, CO
Nelson Walley Real Estate
NICOLE VINCENT
Hawaii
Sotheby’s International Realty
NOBLE BLACK
New York, NY Douglas Elliman
RICKY & CATHY TEAM
Santa Fe, NM
Sotheby's International Realty
TIM ALLEN
Carmel, CA Coldwell Banker
TIM ELMES
Fort Lauderdale, FL Compass
TIM TAMURA
Corona Del Mar, CA Valia OC
TOMER & ISADORA FRIDMAN
Beverly Hills, CA
Compass
TRACY ALLEN
Hawaii
Coldwell Banker
The Dawn McKenna Group’s (DMG) commitment to expansion has now established this team as a major influence nationally.
When Hinsdale clients began asking for piedà-terres in the city or an apartment for their children graduating from college, DMG launched a downtown Chicago office. When clients began asking for vacation homes, DMG expanded to Naples, Florida. The same secret sauce was applied to Chicago’s North Shore in 2019. This innovative approach saw DMG open two new offices early in 2023: Lake Geneva, Wisconsin and New Buffalo, Michigan. Followed very shortly by a third office in Park City, Utah.
Not content to “list it and hope,” DMG uses an exclusive network, sophisticated marketing, and every available tool to seek out the right buyers for its listed properties. With local expertise and hard work, it is also DMG’s mission to find buyers and renters the perfect home. Always professional, DMG is also aggressive, resourceful, innovative, and stylish.
The success of this strategy is seen in the DMG's significant, often record-breaking sales and market-leading overall statistics in 2022/1Q 2023.
CHICAGO - 421 E. BENTON PLACE #421 DMG represented the Seller$3,995,000
941 GALLEON DRIVE / Naples, FL
1600 3RD STREET / Naples, FL
800 17TH AVENUE S / Naples, FL
26564 HICKORY BOULEVARD / Bonita Springs, FL*
15 W BURTON PLACE / Chicago, IL
611 LANSDOWNE LANE / Lake Bluff, IL
505 S. COUNTY LINE ROAD / Hinsdale, IL*
754 16TH AVENUE S / Naples, FL
720 ARDSLEY ROAD / Winnetka, IL
2350 WINDWARD WAY / Naples, FL
660 21ST AVENUE S / Naples, FL
733 18TH AVENUE S / Naples, FL
6303 BURNHAM ROAD / Naples, FL
1571 BONITA LANE / Naples, FL
965 E. DEERPATH ROAD / Lake Forest, IL
13915 OLD COAST ROAD #PH03 / Naples, FL*
320 E. 4TH STREET / Hinsdale, IL
1620 GULF OF MEXICO DRIVE / Longboat Key, FL
736 S. PARK AVENUE / Hinsdale, IL*
4478 WAYSIDE DRIVE / Naples, FL
504 S. OAK STREET / Hinsdale, IL
448 E. 6TH STREET / Hinsdale, IL
231 E. 3RD STREET / Hinsdale, IL
727 S OAK STREET / Hinsdale, IL
711 S. GARFIELD / Hinsdale, IL*
3991 GULF SHORE BOULEVARD N #1702 / Naples, FL
855 AUBURN ROAD / Winnetka, IL
844 S. LINCOLN / Hinsdale, IL
$2,850,000 $2,800,000 $2,750,000 $2,750,000 $2,737,500 $2,625,000 $2,570,000 $2,545,000 $2,525,000 $2,500,000
314 S. WASHINGTON STREET / Hinsdale, IL 8787 BAY COLONY DRIVE #502 / Naples, FL
E. 6TH STREET / Hinsdale, IL* 1851 N. FREMONT STREET / Chicago, IL 4400 GULF SHORE BOULEVARD N #6-604 / Naples, FL 422 E. 6TH STREET / Hinsdale, IL* 135 N. GREEN BAY ROAD / Lake Forest, IL 439 E. 6TH STREET / Hinsdale, IL* 1135 3RD AVENUE S #310 / Naples, FL 16533 BUONASERA COURT / Naples, FL
121 E. 4TH STREET / Hinsdale, IL*
1724 N. DAYTON STREET / Chicago, IL
5706 CLARENDON DRIVE / Naples, FL
532 W. NORTH / Hinsdale, IL
527-541 KENSINGTON COURT / Hinsdale, IL*
800 ROSEWOOD AVENUE / Winnetka, IL
318 SOUTH LINCOLN / Hinsdale, IL
132 E. 5TH STREET / Hinsdale, IL*
4551 GULF SHORE BOULEVARD N #103 / Naples, FL*
1209 N. ASTOR STREET #PH / Chicago, IL
1270 CHURCH STREET / Northbrook, IL
425 E. 4TH STREET / Hinsdale, IL
58 WOODLEY ROAD / Winnetka, IL
13945 OLD COAST ROAD #301 / Naples, FL
1125 CENTRAL AVENUE #379 / Naples, FL
425 E. 8TH STREET / Hinsdale, IL*
8720 BAY COLONY DRIVE #603 / Naples, FL
$2,150,000
16685 TIMBER LANE / New Buffalo, MI
580 NEWCASTLE DRIVE / Lake Forest, IL
906 S. GARFIELD STREET / Hinsdale, IL
306 N. GARFIELD STREET / Hinsdale, IL
411 E. 3RD STREET #235 / Hinsdale, IL
1304 N. RITCHIE COURT / Chicago, IL
910 S. PARK / Hinsdale, IL
5526 S. ELM / Hinsdale, IL
808 MCKINLEY LANE / Hinsdale, IL
581 WEDGEWOOD WAY / Naples, FL
13935 OLD COAST ROAD #1504 / Naples, FL
14 W SUPERIOR STREET #4801 / Chicago, IL
1111 CENTRAL AVENUE #312 / Naples, FL
5134 ANDROS DRIVE / Naples, FL
401 N. WABASH AVENUE #82A / Chicago, IL
1557 CHESAPEAKE AVENUE / Naples, FL
$2,127,000 $2,110,000 $2,100,000 $2,075,000 $2,050,000 $2,025,000 $2,000,000 $2,000,000 $2,000,000 $2,000,000 $2,000,000
1080 HAVENWOOD LANE / Lake Forest, IL
532 W. NORTH / Hinsdale, IL*
4098 ASPEN CHASE DRIVE / Naples, FL
5560 S. OAK / Hinsdale, IL*
5316 LAWN AVENUE / Western Springs, IL
732 W. NORTH / Hinsdale, IL
14660 RESERVE LANE / Naples, FL
601 7TH AVENUE S #201 / Naples, FL
5319 BLODGETT AVENUE / Downers Grove, IL*
11 PEMBROKE DRIVE / Lake Forest, IL
20 N LOOMIS STREET #C / Chicago, IL
The changing nature of the high-end housing market has given way to bold proclamations and media dramatizations. But do the latest headlines accurately reflect what’s really happening in the marketplace? We take a closer look behind several data points and theories to find several stories that paint a more nuanced luxury real estate picture for 2023.
The majority of Coldwell Banker Global Luxury Specialists say that their HNW clients are looking for primary residences – and that may be true, depending on the market they represent – but recent data also supports the opposite narrative. The affluent still appear to be on the hunt for secondary homes despite higher interest rates eating into their affordability.
The secondary-home ownership trend gained prominence during the pandemic as remote work took root along with growing wealth and stock market portfolios. With remote work expected to be permanent for many high-income earners, secondary desires – like creating generational wealth, the need for long-term wealth-building assets, and a strong push to spend quality time with their favorite people in memorable locales –have coalesced around secondary homes, taking them from a niche market to a mainstay of the affluent lifestyle.
According to Wealth-X, the number of U.S. homeowners with a net worth of $5 million+ jumped from 1,255,710 to 1,675,756 from 2021 to 2022 – a 33% increase.
The percentage of those who own two or more properties also increased from 70% in 2021 to 79% in 2022 – with the most significant increase going to those who own three or more homes.This trend aligns with the findings from a 2022 Coldwell Banker Global Luxury/Censuswide survey of 2,000 U.S.-based HNW individuals, featured in The Trend Report 2022, which found that 72% of respondents said that their new home would be either a second residence, rental property, or vacation home.
This trend aligns with the findings from a 2022 Coldwell Banker Global Luxury/Censuswide survey of 2,000 U.S.-based HNW individuals, featured in The Trend Report 2022, which found that 72% of respondents said that their new home would be either a second residence, rental property, or vacation home.
While baby boomers were thought to be prevalent buyers of secondary homes during the pandemic, they are not expected to play as prominent a role in the market since many of them have likely already secured these homes.
The next wave of secondary-home buying, rather, is predicted to be driven by Gen-X and millennials.
However, they’re not looking for the same types of secondary homes as their parents or grandparents. They prefer hybrid properties – ones that they can use as part-time getaways and rent out the rest of the time while building wealth. This is especially true of millennials, those born between 1981 and 1996, who have lagged behind in homeownership rates of previous generations.
Priced out of big cities, where home prices have substantially risen, some financially savvy millennials have started to bypass the starter home altogether in favor of purchasing escape homes in further-out, lesser-in-demand locations that offer plenty of recreation and adventures.1 These homes tend to be smaller and less expensive, on average, and that’s just fine with them. It’s all part of their wealth-building strategy.
Social media influencers are thought to have a partial hand in this trend. Some have encouraged
their followers to purchase “experiences” and invest in “assets not liabilities.” From their point of view, buying secondary homes can provide younger investors with the best of both worlds – a steady revenue stream that can help them build wealth and a property that they can escape to whenever they please.
“Owning properties in different locations offers them a variety of experiences and lifestyles,” said Michael Altneu, Vice President of Global Luxury for Coldwell Banker Real Estate LLC. “The flexibility of remote work has really made this possible over the last few years. Millennials, who tend to value experiences rather than things, appear to be fully leaning into this idea.”
“
72% OF HNW MILLENNIAL RESPONDENTS SAID THAT THEY PLANNED TO BUY A SECONDARY, RENTAL, OR VACATION HOME IN THE NEAR FUTURE.”
According to Wealth-X, New York has the highest population of HNW individuals who own secondary homes in other cities. Silicon Valley, the San Francisco Bay area, Los Angeles, and Chicago followed. Not a surprise, given wealthy East Coasters and mid-Westerners’ propensity for flocking to warmer climes during winter months, and Californians’ love of the mountains, desert, or beach for a change of pace. New York, Los Angeles, and San Francisco are also known for
having some of the country’s most expensive real estate, possibly prompting some savvy residents to purchase more affordable secondary homes elsewhere.
The top two metropolitan areas with the highest concentration of secondary-home owners with a net worth of $5 million+ are two of the most expensive coastal areas: New York and Los Angeles. It is noteworthy that these cities – already known to be epicenters for UHNW individuals –are equally in high demand by HNW individuals in lower wealth brackets. These metros also have the highest populations of affluent primary residents in the United States.
home hotspots during the pandemic for wealthy New Yorkers and mid-Westerners. The Denver metro area’s appearance among the top 10 also speaks to the Rocky Mountain region’s growing appeal as a playground for young, wealthy, coastal transplants from New York and California.
Metropolitan Areas*
New York
Los Angeles
Miami
San Francisco
Washington, D.C.
Silicon Valley
Naples
Boston Chicago
Denver
It’s interesting to see the proportion of primary residents compared to the proportion of secondary-home owners in resort markets like Miami and Naples, which emerged as secondarySource:
# of Secondary Homeowners in Each Market
# of Primary Residents in Each Market
The secondary-home market is not a niche sector anymore. In a sign of the secondary-home market’s solid footing, nearly half of all individuals with $5 million+ in net worth now own three or more homes. If the U.S. stays on its current trajectory and the population of HNW individuals grows over the next several years as forecasted by Wealth-X, this number could be much larger in the future. This means more of these luxury buyers will likely be entering the scene in search of their next vacation spot or an extra source of income – and that means more diversification could be on the way.
In the early days of the pandemic, there was a notable shift to premium resort/recreation markets such as Napa, Kauai, Naples, Aspen, and Lake Tahoe. Then, as affordability shrank and inventory levels deteriorated, some buyers shifted their focus to adjacent locations like Bonita Springs, Snowmass, and Truckee. Meanwhile, large cities like New York, initially hit hard by the pandemic and then rebounded, got help from locals who capitalized on the opportunity to snap up a secondary income-producing apartment when prices were low.
In 2023, the expectation is that a mix of premium and more affordable secondary-home markets, as well as some resort and urban locations, will hold their own. We could also see modest price growth in some of these locations if inventory remains tight and small price drops in others, which could give weary buyers a chance to return to their dreams of escape or pursue their goals for longterm financial security.
For example, prices increased modestly toward the end of 2022 in Napa wine country and Arizona’s favorite snowbird spot, Scottsdale, in a show of demand strength. Meanwhile Cape Cod, Lake Tahoe, and Naples, Florida, could present new opportunities for secondary-home buyers this year thanks to rising luxury home inventory levels and softening prices in fourth quarter 2022. Settings with access to nature – in the mountains, near national parks, or along the water – will particularly remain fertile buying ground as HNW individuals continue to prioritize their mental well-being and personal life enjoyment.
“ THE PREVALENCE OF REMOTE WORK AND THE DESIRE TO CREATE MEMORIES AND EXPERIENCES WITH THOSE THEY LOVE HAS CREATED ‘A NEW NORMAL’ FOR SECONDARY HOMES AMONG THE AFFLUENT.”
When mortgage rates started to climb in late 2022, the market entered an adjustment period. Some buyers pulled out, leaving more inventory and less competition for those who remained. It also put downward pressure on pricing, causing price growth to slow down or, in some cases, even reverse course.
But market conditions only play a small role in what’s happening on the ground in today’s housing market.
According to agents, psychology – particularly on the side of sellers –is playing an increasingly important part, too. Often, it’s even a major barrier to selling a home successfully.
LAKE FOREST - 1080 HAVENWOOD LANE DMG represented the Seller“Most homeowners saw significant gains in their home’s value over the pandemic and have naturally tuned their pricing expectations to 2020 and 2021, when record low inventory and bidding wars were the norm and caused prices to skyrocket,” said David Marine, Chief Marketing Officer for Coldwell Banker Real Estate LLC. “Those were record years, but those conditions just could not be sustained.”
When it comes time to sell their home, not all sellers have been ready to set realistic price tags on their homes, thus leading to longer days on market. In fact, according to our Vision Survey, 40% of our agents say “outdated expectations based on 2020 and 2021 market conditions” are the greatest challenge to selling a home this year.
What’s behind the psychology of pricing, and what can be done to help sellers move their mindsets forward this year? Let’s take a look.
39.9% 33.7% 16.8% 9.6%
Outdated selling expectations
Lack of replacement homes Less need to sell Hesistancy for financial reasons
Whereas the 2020-2021 markets were the hottest on record, driven by conditions the world has never seen before, today’s market is a more muted one – less volatile and more like the markets of prepandemic years (which were strong nonetheless).
“The market today offers a little more breathing room,” added Marine. “It’s not moving at the same breakneck speeds we saw a few years ago, but sellers still wield a lot of power. If they’d look back at the conditions of 2019, for example, they’d see they’re still in a great place to list.”
Another issue is the list vs. sale price dilemma. When browsing online listings, consumers only have access to the list price – which is often far higher than what a home actually sells for.
At the end of 2022, for instance, the median saleprice-to-list-price ratio (SP/LP%) average sat at 97% in the luxury market, meaning a home listed at $5 million actually sold for $4.85 million, per the Institute for Luxury Home Marketing. Monetarily, that’s a big difference, and it indicates quite the disparity between what sellers want for their homes and what buyers are prepared to offer.
“Any buyer’s agent is going to clue them into local sales price trends, so listing above-and-beyond what the market can support is rarely successful,” noted Liz Gehringer, President of Coldwell Banker Affiliate Business and Chief Operating Officer of Coldwell Banker Real Estate LLC, “Sellers should expect buyers to be informed and savvy –particularly as higher mortgage rates strain their budgets.”
“
COMPARING TODAY’S MARKET TO 2021 IS LIKE COMPARING APPLES TO ORANGES.”
Another problem is what a University of Pennsylvania study calls “reference dependence,” or the psychology of comparing what a seller paid for their home – the “reference” point – to what the home could potentially sell for.2
According to the study, homeowners are “loss averse,” meaning when they fear they may lose money on their sale (which many do when phrases like “recession” and “slowdown” are thrown around), they attempt to make up for it by basing their listing price on their original sale price – plus a hefty premium. As the premiums get bigger, the larger the perceived loss is.
“According to pure rational logic, the past sales price should not affect how you set your current list price,” says Li Liu, an assistant professor of finance at University of Pennsylvania’s Wharton School and one of the study’s authors. “Homeowners try to push the list price higher, just so they can offset that potential loss. We think of this as a psychological preference.”
“This psychological effect can play out big in the luxury market,” said Michael Altneu, Vice President of Global Luxury for Coldwell Banker Real Estate LLC. “With so much money on the line, many sellers may be tempted to demand exorbitant premiums that the market just doesn’t support.”
“ THE STUDY FOUND HOMEOWNER’S ‘LOSS AVERSION’ IS 2.5 TIMES HIGHER THAN THEIR DESIRE TO REALIZE A GAIN.”
It’s also important to remember that, for luxury homeowners, selling a property isn’t just a numbers game. Emotion and a personal attachment to the property are involved, too – and that can impact one’s perception of value significantly.
“Many affluent sellers see their properties as unique, special properties that really stand out from the pack – and they expect to price them as such,” said Altneu. “If they’re notable people or in the public eye in some way, it can have even more of an impact on pricing.”
Uniqueness also plays a role in pricing luxury properties, especially when as you reach into the higher echelons of the market. But uniqueness is subjective – and assigning value to that uniqueness – can be especially challenging when there is no other comparable property.
“It has often been said that pricing luxury properties is both an art and a science, but once you move into the territory of trophy properties – those rarified, one-of-a-kind homes that are without peer – pricing becomes even more of an art form,” Altneu pointed out. “How do you accurately assign value when there’s nothing to compare it to?”
Prestige pricing could also play a role in some sellers’ hesitancy to be realistic on the value of their home. In luxury, high prices are expected – and there’s the idea that pricing lower, even slightly, could hurt sales and impact the overall view of the market. Sellers undoubtedly take this into account when pricing their properties and setting their expectations.
“An ultra-high price typically suggests ultrahigh quality,” Altneu said. “It can often equate to exclusivity, too – like a one-in-a-million painting that can’t be replicated. Does it mean that painting or, in this case, property is actually worth that soaring price, though? That depends on who you ask.”
“ PRICING LUXURY PROPERTIES IS BOTH AN ART AND A SCIENCE.”CHICAGO - 1209 N. ASTOR STREET #PH HINSDALE - 650 S OAK STREET DMG represented the Seller DMG represented the Seller
To be clear: The seller is not the only one to blame. Buyers see headlines of price declines and market slowdowns, and they expect that bargainbasement deals are around the corner.
That’s far from the case these days, but psychologically, this mindset can take its toll on the home shopping process.
In fact, our Vision Survey found that almost 50% of agents see buyer expectations of “significant price declines” as the single biggest barrier to home buying this year. It’s even bigger than low inventory, according to agents.
“Those stats say a lot,” Gehringer said. “Buyers, like sellers, just haven’t caught up to reality of 2023 yet. That’s where the great agents are going to rise to the top – in educating and informing these consumers on the changing market.”
Understanding where buyers’ heads are at can help sellers better adjust their expectations, too. Most luxury buyers are purchasing out of want as opposed
to need, and that offers them some discretion in the properties they consider, particularly when the market is less frenzied. They can take their time, view dozens of properties, and really wait it out until the ideal home comes along.
As Marine summed up, “Until this pricing disconnect between buyers and sellers is resolved, seller patience is going to be critical.”
The top segment of high-net-worth (HNW) consumers are thought to generate the majority of all luxury sales. Is it true for luxury real estate? Our analysis of 10 prime U.S. markets from New York to Los Angeles, and Aspen in between, proves that the wealthiest spenders still carry the high-end residential market, in good times and in bad.
LAKE BLUFF - 611 LANDSDOWNE LANE DMG represented the Seller
Much has been made about the general resilience of luxury consumers in the face of economic challenges. But even more resilient is the highest tier of luxury consumer: the ultra-high-net-worth (UHNW) individual. “Their extreme wealth has insulated them to the point that they would be the last to feel the effects of a 20% stock market correction or a 3 to 4% rise in interest rates,” said Milton Pedraza, CEO of the Luxury Institute. “They’re not immune, but they are super-resilient.”
This exotic luxury consumer tends to be very well-diversified with their investments and assets, preferring a mix of stocks, mutual funds, retirement accounts, and real estate – thus, exposing their tremendous fortunes to less risk. They likely own three or more homes, both in the U.S. and abroad. So much wealth has been created over the past two decades – especially over the course of 2020 and 2021 – that most experts expect ultra-wealthy individuals to continue to flex their spending power despite economic uncertainty this year.
As Pedraza puts it: “The top 20% of wealthy consumers generate 70% of all luxury sales while the rest of the affluent consumer segment drives only about 30% of sales.” Or, in other words, the wealthiest of the wealthy will carry the overall luxury market. But is this true for real estate? And will it be the case for 2023 with all of its potential economic and geopolitical headwinds?
According to market data examined by the Institute for Luxury Home Marketing, the answer appears to be a general “yes” – with some key differences.
Almost 90% of all HNW individuals have a net worth of $1 million to $5 million, per Wealth-X.3 That leaves only one in every 10 of the world’s millionaire population classed as a very-highnet-worth (VHNW) individual, with a net worth between $5 million and $30 million.
Comprising an even smaller piece of that pie are UHNW individuals, or those with $30 million+ in net worth. Emerging more recently within this elite millionaire circle is a fast-growing segment Forbes has dubbed “a new class of super-rich”: the centimillionaire, or those who have at least US$100 million in investable assets.4
According to Wealth-X data, the U.S. had the highest percentage of UNHW individuals at 127,800 at the end of 2022 – more than double China’s UNHW population and six times that of Germany’s. They hold more than $14,227.5 billion USD in wealth, giving them an outsized spending influence on assets such as real estate. Another study by Henley & Partners, a London-based investment migration consultancy, found that the U.S. had 9,730 centimillionaires in 2022, accounting for 38% of the world’s total of 25,490.5
“ UHNW INDIVIDUALS ARE CONSIDERED TO BE THOSE WITH $30 MILLION OR MORE IN NET WORTH”
392,410
3,614,960
$41,824bn
$35,984bn
30,203,740 $56,593bn
These UHNW individuals are continuing to stay put in their favorite playgrounds – gravitating to places like New York, Los Angeles, London, as well as second home getaways like Palm Beach, the Hamptons, and Aspen. They demand absolute privacy, the highest quality, the best experiences, and the most exclusivity, especially when it comes to their real estate collections.
According to the National Association of Realtors (NAR), million-dollar sales (the NAR threshold for luxury) represented on average a 6.6% of all existing U.S. home sales in 2022, climbing as high as 7.9% in May 2022.6 This is a comparatively small amount when measured against the 27.8% represented by properties priced $500,000 and above. Still, that 6.6% was roughly double what it was in 2018, which had remained consistent since at least 2016.
Million-dollar sales may comprise a small percentage of the overall U.S. housing picture, but the very top of the luxury segment does most of the heavy lifting. During our review of 10 prime markets – those markets where the ultra-wealthy tend to own property, the top 20% represented about half of all luxury home sales in the last four months of 2022 on average.
Most dramatic was the tony Palm Beach area, where the top 20% represented almost 80% of all luxury home sales in 2022 – where the entry threshold price for luxury properties started at $1,460,000. Meanwhile the top 20% in Aspen –home to “Billionaire Mountain” – only represented 48% of all luxury home sales in 2022, but the price threshold was much higher at $23,500,000.
When you look at dollar volume, you see that the top 20% of the market in these destinations carries the local luxury sector. For example, the
Source: Wealth-X, an Altrata company. See page 122 for a full list of resources.
coastal communities of Connecticut – which include Greenwich, Darien, Westport, and Southport – ended 2022 with $4.9 billion in sales for the top 20% of the high-end market and that was more than half of all luxury home sales. But it’s the luxury capital of the world – New York – that shines when you look at the top 20% of luxury home sales. These sales alone in the Big Apple – generally anything over $4.3 million –drove a whopping $19 billion, per UrbanDigs, of the $33.5 billion in total sales volume for all 10 markets we reviewed, controlling about half of the entire local NYC luxury home market.
The 2023 luxury real estate story is still an open chapter waiting to be written.
Even if a true slowdown does occur, it is important to remember that the continued strength of the overall market is likely be driven by the powerful players at the very top. Lessons learned from past downturns support this view: the ultrawealthy tend to lead. And so far, today’s wealthiest individuals appear to be leading by living well.
“There’s been a cultural shift after the pandemic and the ultra-wealthy feel less guilty about spending their money if it means they can have experiences to share with their families and friends,” said David Marine, Chief Marketing Officer of Coldwell Banker Real Estate, LLC. “It could mean more travel this year, but it could also mean a home in a new place. A home fulfills a few needs for them – financial, personal enjoyment, wellness, security.”
Conflicting economic signals. Sensational media headlines. If you’re confused about how to read the tea leaves of the latest real estate data, you’re not alone. Here are three of the most common misconceptions about pricing, inventory, and sales numbers, and why reality may be better than perception for the luxury home market this year.
WINNETKA - 800 ROSEWOOD AVENUE
DMG represented the Seller and Buyer
“Prices are falling so my home is worth significantly less today than it was last year.”
As buyers adjusted to higher borrowing rates, economic uncertainty in 2022 and declining numbers of sales, much talk has centered around the idea that prices would eventually start to fall too.
In comparing the median sold price for luxury homes across 125 markets from December 2021 to December 2022, the prices actually shot up by 106.5%! There has been a small price correction of 3.5% when comparing December 2022 against June 2022, which recorded the highest median sold price during 2022.
During this time period, some markets reported a 10% to 12% price decrease while others reported price growth in double digits. With numbers like that, how do you determine if your property’s value is really falling or not?
Using a single parameter like median sold prices to prove property value declines is not telling the whole story, especially if you are comparing the volatile 12 months of 2022 against 2021. You need to understand the influence of inventory, especially new inventory, as well as the change in demand.
One of the key parameters that must be factored into your understanding of price drops in a changing market is how a shift in demand can distort the perception of median price.
Part of what is driving down the median sales price currently is that there are now more sales for lower-priced luxury homes. Reasons for this include higher interest rates eating into buyers’ affordability, the resurgence of cities where properties tend to be smaller, people don’t need as much space as they did during the height of the pandemic, and rising demand for multiple homes, which tend to be smaller. SP/LP% is a far more telling metric.
LAST YEAR VS.
Luxury mansions and estates with higher price tags were in demand
Buyers were paying over asking price
A severe lack of inventory was driving up home prices
Prices were less of a factor because interest rates were low
THIS YEAR
Homes with smaller footprints (and price tags) are in demand
Buyers are warier of overextending themselves
Inventory is still low, but there is less new inventory entering the market
Prices are more important because interest rates are substantially higher
We reviewed the data for single-family homes in just four very different U.S. luxury home markets to demonstrate. When you look at overall luxury home prices from the first quarter to the fourth quarter of 2022 in some of these locations, it looks like prices have decreased dramatically.
Take Maui as an example. Prices for luxury homes dropped from about $4.5 million in the first quarter to $3.9 million in the last quarter. When you look at the SP/LP%, it was at 89%, suggesting that price negotiations were happening. However, when you look at home prices in the $1-2 million and $2-3 million categories, prices have stayed relatively
stable and even notched up a little in the $2-3 million range. The SP/LP% was close to 100% for the $1-2 million range, and 102.2% for the $2-3 million range, which shows strength in these price segments.
To get a more accurate picture of the value of properties in your market, it is much more helpful to compare home sales by price band rather than using the whole market, and not be influenced by properties that have been on the market a long time and probably would have been overpriced even in the seller’s market of 2021!
“Inventory levels are rising; therefore, I will be able to find my dream home at the price I want.”
Buyers have recently been encouraged by media narratives that inventory levels were finally up in 2022. But when they went house shopping and still struggled to find properties that met their criteria, they were rightly confounded. If inventory was increasing, then why couldn’t they find the home they wanted?
From May 2020 through May 2022, the level of luxury home inventory dropped month over month, on average. By May 2022, there was an upswing and buyers began to see relief in what was a very dark tunnel of “chasing the market.” But this upswing in inventory, together with the Federal Reserve announcing its plan to continue increasing interest rates, was countered by a dearth of sales. After which, new inventory entering the market declined in the last six months of 2022 compared to the second quarter of 2022 – likely due to seller hesitancy. Inventory levels did seemingly continue to rise, so what was the reason behind this disparity?
Our Opportunity Index stats show that active listings rose in 112 markets out of 125, but 100 markets saw a comparative decrease in the number of new listings from the last four months of 2022 compared to the first eight months.
There are a few reasons for this anomaly. First, supply levels increased because inventory stayed on the market and stale inventory accumulated. The inventory that remained on the market did not meet the criteria of buyers, for whatever reason, whether it be price, home condition or quality, size, location, or all of the above.
This was compounded by sellers who were not willing to budge on price and let their listings languish on the market. As we can see from the chart in July, new sellers started to hesitate, as they feared higher interest rates or the prospect of not being able to find a replacement property. This, in turn, created a lack of new inventory. The selfinflicted cycle continued.
Properties that did come onto the market, were priced correctly, and checked all of the desirability boxes (such as move-in ready, amenities, privacy, and views), still sold in record times and often, for full asking price.
Several markets show these conflicting dynamics at play when we compare the last four months of 2022 against the first eight months of 2022. In Central Connecticut, active listings only increased by 17.6% yet new inventory decreased by more than 24%, which resulted in an SP/LP% of just over 100%, suggesting that sellers here were often achieving their price and even a little above it. More dramatically, Portland recorded a nearly 47% increase in active listings, but a 23%
decrease in new inventory, resulting in an average 99.2 SP/LP%.
To get a more accurate picture of the opportunities created by rising or falling inventory levels and improve your standing during price negotiations, it is important to understand the general makeup of available inventory in your particular price point in your local market area.
“Declining sales are a harbinger of a housing market crash.”
While it’s true that sales in the final quarter of 2022 were down compared to 2021, you have to remember that 2021 was also one of the hottest real estate markets on record. Sales also only show one angle of a much more complex data view.
It takes more than just declining sales to make a real estate crash. More likely, slowing sales are likely a symptom of a housing market that’s coming off of a two-year pandemic-influenced buying high and settling into a pace that’s more in line with historical norms as we can see when comparing sales in 2019 vs 2022.
Other economic factors, too, would likely need to be present, such as high unemployment. So far, the 2023 jobs market is off to a strong start, posting its biggest gain in January since July 2022.7 Mortgage rates have also started to come down, which could spur more activity in the housing market just in time for the normally busy spring buying season.
Source: Institute for Luxury Home Marketing
Crash or Correction?
Another “c” word may be a more apt description for the current real estate landscape: Correction.
Buyers are in the process of adjusting to a new reality, where mortgage rates are roughly double what they were in 2020 and 2021 when rates plummeted below 3%.8 Historically speaking, a 6% rate is still low, as anyone who purchased a home during the 1980s and ’90s will tell you.9 But for much of the last decade, the reference point for mortgage rates has hovered around 4%. So when rates jumped to 7% in October 2022, it was a shock to the system. Understandably, wealthy individuals took a breather to reassess their homebuying plans.
Eventually, affluent buyers (and sellers too, if they are letting go of a lower rate on their current home) will adapt to a higher reference point, as they always do. Some experts even expect millennials – now the nation’s largest living adult generation – to keep demand steady as they build up their wealth portfolios and age into their prime homebuying years.
Terms like “down market” and “buyer’s market” tend to get conflated during housing market corrections, but they are not the same thing. It’s not clear that either description accurately describes the 2023 luxury residential landscape. Take, for example, the question of whether we
are in a buyer’s market. It largely depends on the unique supply and demand of a local area. The market as of December 2022 saw a huge swing in both directions with 58 of the 125 markets researched registering as seller markets, 26 were balanced, and 45 were favorable to buyers.
Take Denver, Seattle, Boston, and East Bay in Northern California, for example. Conditions in these markets for single-family homes generally still favor sellers right now. Meanwhile, in places like Miami, Park City, Maui, and Reno (markets that experienced major buying booms during the pandemic), conditions are friendlier to buyers. But even then, that’s not the entire picture, as we have seen the pendulum swing in opposite directions over as little as a single month.
What is more likely happening now in many locations across the country is an equalizing for both buyers and sellers. As Danielle Hale, Realtor. com ® Chief Economist noted: “The 2023 housing market could become a ‘nobody’s market,’ not friendly to buyers nor to sellers.” 10
For the level of sales to increase in 2023 and beyond, there would need to be an adjustment in both seller and buyer attitudes towards pricing –but this doesn’t mean that prices have to come down. Instead, they need to understand the demand for properties in their market and adjust accordingly to secure a sale.
What global cities are on the minds of high-net-worth (HNW) individuals this year? What’s driving their international purchases, and will metaverse real estate be the next big strategy for diversification? We turned to Wealth-X to get a view of luxury real estate on a global scale this year.
The past few years have been particularly unique ones for the world’s economies, peppered with soaring highs and surprising lows, much of it due to the lockdowns of the COVID-19 pandemic and geopolitical tensions. Inflation, rising interest rates, and volatility in stock markets have also injected some uncertainty into the global wealth picture. But as we ease into 2023, conditions are starting to normalize again – with less volatility and an overall more consistent outlook on the horizon.
In 2021, the number of consumers with $5 million+ in net worth hit a record high of 4.2 million, according to Wealth-X. Data from Credit Suisse also shows wealth made its biggest jump ever that year – climbing nearly 13%.1
Though 2022 saw a slip to four million from these soaring figures, the number of wealthy individuals worldwide is still up considerably over 2020. The numbers have also improved compared to mid2022, when worldwide wealth dipped by 6.4% (again, compared to historic highs).
Things are likely to continue on this upswing as we move into 2023 and beyond. In fact, Credit Suisse estimates that the number of worldwide millionaires will surge by 40% by 2026 – a mere three years down the road. By that point, an estimated one in seven adults will have a net worth of at least $1 million.
“ LESS VOLATILITY AND A MORE CONSISTENT OUTLOOK IS ON THE HORIZON FOR 2023.”
There are many factors that will influence global wealth trends this year, and these will vary quite a bit from one region to the next. Overall, though, experts project global economic growth around 1.7% this year and 2.7% by 2024, according to the World Bank.2 They’re not huge numbers, but it’s growth nonetheless – and a good indicator of the general strength of the world’s economies. In some places, the possibility of a recession looms – primarily in the U.K. and other Euro-based countries. Inflation, geopolitical conflicts like the war in Ukraine, higher interest rates, and stock market volatility could also play a role in where wealth heads worldwide this year.
Fortunately, many of these concerns only further drive consumers toward real estate purchases –especially at the high end of the market.
HNW individuals are known to be in tune with market fluctuations, and they tend to move their wealth strategically when economic challenges persist. Since real estate has long been considered a strong hedge against inflation and a smart way to diversify one’s overall investment
portfolio, we can largely expect the world’s affluent to turn toward property investments as a way to preserve their long-term wealth in uncertain times.
In fact, according to Coldwell Banker Global Luxury’s The Trend Report 2022, about 40% of those with a net worth of $1 million+ plan to purchase a property in the next one to three years.
“ THE WORLD’S AFFLUENT WILL TURN TOWARD PROPERTY INVESTMENT AS A WAY TO PRESERVE THEIR LONG-TERM WEALTH.”
Changes to worldwide populations and demographics will trickle down to real estate in big ways this year, too. For one, the number of worldwide millionaires is now at its highest point in history, and by 2026, there will be around 1.6 million individuals with a $1 million net worth or higher.3 Most of those will be concentrated in the U.S., China, Japan, the U.K., France, Germany, and Canada.
In the ultra-high-net-worth (UHNW) category, which Credit Suisse defines as $50 million in net worth or above, the Zurich-based bank estimates there will be nearly 400,000 worldwide by 2026. It can be assumed that many of these new ultra-wealthy consumers will be of younger generations. In the U.S. and Canada, millennials and Generation Xers have grown their wealth the most over the last three years, notching increases of about 25% (U.S.)
Ages: 21-42
Ages: 43+
and 19% (Canada) compared to the 7% to 11% uptick seen by all generations as a whole.
If these trends continue, younger consumers will wield more and more power in the real estate community, particularly given their propensity for property investments. According to the 2022 Bank of America Private Bank Study of Wealthy Americans, affluent consumers aged 21 to 42 allocate a mere 25% of their portfolios to stocks and are significantly more likely to invest in alternative investments – real estate included.4 For investors 43 and older? Stocks make up more than half of their portfolios and alternative investments, a mere 5%.
Younger cohorts are also highly likely to purchase abroad. In 2021, the 25-to-34-year-old group came in last in terms of international real estate interest. By 2022, they moved up to second, with only 55-and-up consumers coming in ahead.
Home equity levels have surged over the past few
years and should give existing property owners serious cash to work with in 2023. Strategic investors may decide to put that cash toward secondary homes, pieds-a-terre, and vacation properties in international markets – particularly if they’re facing inflation and economic uncertainty at home.
There is also relative strength of the U.S. dollar that opens many doors. With the value of US$ up over 14% compared to some currencies, many affluent consumers whose wealth is in US$ or other strong currencies may see the wealth-building opportunity that global investments present – as well as the increased buying power and notable discounts they’ll find on the ground abroad.
Finally, the changing lifestyles that have emerged out of the COVID-19 pandemic also present more buying opportunities for many HNW individuals. This is particularly true for those who enjoy workfrom-home arrangements – even partial ones – as this lends itself to a more geographically flexible investment strategy overall.
“
BY 2026, MILLIONAIRES WILL TOTAL 1.6 MILLION AND THOSE WITH $50 MILLION+ WILL TOTAL NEARLY 400,000 WORLDWIDE”
For the world’s affluent, the primary residence is both a commodity and a luxury they can enjoy with family and friends. HNW buyers want properties that provide security, safety, and comfort, sure, but they also consider the value of the investment – both personally and in the financial sense.
For those who have the funds to live anywhere they please, which cities offer this mix of both practicality and appeal? And how have those trends changed over time? We turned to Wealth-X to uncover the top places where HNW individuals establish their primary residencies.
The world’s wealthy gravitate toward major hubs of business, finance, and culture – both globally and on a local scale. When looking at the globe as a whole, it is U.S. cities of this type that dominate the list – New York, Los Angeles, San Francisco, and Chicago, just to name a few.
What’s particularly interesting is that New York beats out every other international city — and by quite the landslide. The Big Apple has a whopping 45,849 more HNW individuals than the No. 2 spot, London, UK. It’s more than Nos. 8, 9, and 10 combined.
Surprisingly, it’s not just the city’s many amenities that are drawing in the wealthy. Compared to
other international hotspots, it actually offers quite the bargain. According to data from the National Association of Realtors, NYC properties are priced around $17,000 per square meter.5 Hong Kong’s are $28,000 and London’s top $26,000. When you throw in the city’s position as a luxury mainstay and the status and prestige that comes with an NYC abode, it’s easy to see the appeal.
It’s also unique to see San Francisco and Los Angeles beat out so many global hubs, and by so much. Again, this may have something to do with the relative value offered by these California cities compared to more international spots. San Francisco buyers pay just $8,250 per square meter, while LA’s prices are nearly half that.
Source: Wealth-X, an Altrata company. See page 122 for a full list of resources
HNW consumers rarely own just one property. Among individuals with net worth of $5 million+, Wealth-X data shows that nearly 14% of all global wealth is put toward real estate and other luxury assets, indicating a high number of secondary homes and vacation properties are likely in the mix.
In fact, according to a recent Coldwell Banker Global Luxury survey of affluent international buyers, 84% of respondents said they own residential real estate outside of their home country. These countries include Italy (90%), Turkey (87%), Costa Rica (87%), the U.K. (86%), France (85%), the U.A.E. (84%), Spain (84%), and Canada (83%).
Where will those properties be located, and more importantly, how do those lists compare to the secondary-home hotspots of 2021? Here’s what we found.
When the U.S. is included, New York once again takes the crown for the most HNW secondaryhome owners globally. Four other U.S. cities earned a place on the list, including Los Angeles, Miami, San Francisco, and Washington, D.C., for a total of 290,000 secondary-home owners – more than all of international cities combined, from Beijing to Geneva. New York alone is home to more than 95,000.
The Dawn McKenna Group’s (DMG) global reach is as extensive as it is powerful. A combination of two of the most dynamic and prestigious networking groups combined with the depth of Coldwell Banker Global Luxury provides DMG with an exclusive, interactive platform for maximized exposure.
As a founding member of the International Luxury Alliance, DMG is granted access to over 70 real estate professionals from Coldwell Banker, The Corcoran Group, and Hamptons International in 36 key markets in the U.S. and abroad, who are actively working with ultra-
high net worth buyers. This group closes over $6.1 billion annually and has an average sales price of $3 million.
The Alliance allows DMG to instantly connect with buyers and sellers beyond the Midwest market to established global centers of affluence such as New York, Paris and London. Dawn has developed personal relationships with each of these agents, which allows her to leverage these connections to both find exclusive real estate opportunities as well as promote properties to the most affluent clientele across the globe.
Arcadia
Ash Rizk
Beverly Hills
Jade Mills
Valerie Fitzgerald
Steve Frankel
Alexis La Montagna
Tiffany Mills
Joyce Rey
Beth Styne
Burlingame
Jim Arbeed
Contra Costa
Khrista Jarvis-Diebner
La Cañada Flintridge
Janice McGlashan
Lake Tahoe (CA & NV)
Amy Marie Smith
Malibu
Brian Merrick
Susan Monus
Menlo Park
Hugh Corrnish
Billy McNair
Montecito
Randy Solakian
Newport Beach
Georgina Jacobson
Tim Smith
Pebble Beach
Tim Allen
Saint Helena
Cyd Greer
San Francisco/
Pacific Heights
Joel Goodrich
COLORADO
Aspen
Carrie Wells
CONNECTICUT
Greenwich
Tamar Lurie
FLORIDA
Coral Gables
Judy Zeder
Nathan Zeder
Delray BeachGulf Stream
Candace Friis
Miami Beach
Jill Eber
Felise Eber
Danny Hertzberg
Hillary Hertzberg
Jill Hertzberg
Palm Beach
Suzanne Frisbie
Dana Koch
Paulette Koch
Naples
DAWN McKENNA
Sarasota
Roger Pettingell
Tampa/St. Petersburg/ Clearwater
Jennifer Zales
GEORGIA
Atlanta
Debra Johnston
HAWAII
Honolulu
Tracy Allen
Beth Chang
Maui
Mary Anne Fitch
Chicago
DAWN McKENNA
MASSACHUSETTS
Boston
Ricardo Rodriguez
Boston-Back Bay
Jonathan P. Radford
Brookline
Deborah M. Gordon
Cambridge
Gail Roberts
MICHIGAN
New Buffalo
DAWN McKENNA
NEW JERSEY
Fort Lee
Michele Kolsky-Assatly
Westfield
Frank D. Isoldi
NEW YORK
Bridgehampton
Susan Breitenbach
Brooklyn
Jessica Buchman
Deb Rieders
Chelsea-Flatiron
Julie Pham
Peter Zaitzeff
East Hampton
Gary Depersia
East Side
Leighton Candler
Cathy Franklin
Marie-Claire Gladstone
Steve Gold
Deborah Kern
Deanna Kory
Hilary Landis
Richard Ziegelasch
Long Island
Diane Pollard
Rye, Harrison, Mam’k/ Larchmont, NY
Michéle Flood
Sag Harbor
Mala Sander
Southampton
Tim Davis
West Side
Scott Stewart
UTAH
Park City
Brad Jensen
DAWN McKENNA
WASHINGTON
Seattle/Bellevue
Lisa Turnure
WASHINGTON D.C. DuPont/Logan Circle
Sylvia Bergstrom
Marin Hagen
WISCONSIN
Lake Geneva
DAWN McKENNA
INTERNATIONAL
Canada
Jane Hoffman
France & Monaco
Laurent Demeure
Vanda Demeure
Italy
Cassiano Sabitini
London
Alasadir Hedley
Mexico
Daniel Ortiz
What will continue to drive the decisions of affluent individuals and their luxury real estate purchases in 2023? What are the trends and aspirations for the year ahead? DMG provides a perspective on buyer and seller expectations.
The Report 2023 reveals that wealthy individuals around the world are in the process of adapting to a market that’s finding a new equilibrium with new reference points. Interest rates are higher. Home selection is improving. List prices are down from late 2021 and early 2022. However, many markets are still posting median sold prices in certain price ranges near 2021’s all-time highs. High-demand property types are still selling at or near asking price.
What has shifted significantly from the pandemic boom days are the number of luxury properties selling. All indications are that 2023 will be a slower year for sales compared to 2021 and 2022. At DMG, we believe it is likely that some affluent buyers and sellers will take advantage of this calmer market to be more discerning about their future real estate goals.
Buyers who are waiting for prices to dramatically fall will adjust to this new reality. Sellers, too, will need to realize that bidding wars and multiple offers over list price are fixtures of a market past.
HNW individuals, who want to move for personal lifestyle reasons and aren’t locked in to extremely low interest rates, will continue to make moves if they find the right opportunity. They’ll continue to prioritize their happiness and enjoyment, looking for highly amenitized properties and secondary homes that offer them a range of experiences.
Don’t be surprised by the growing number of wealthy individuals seeking homes in foreign countries.
The key to navigating the current luxury housing market is to look beyond the macro market indicators that so often get disseminated through the media and pay closer attention to micro market indicators. What’s happening in your local market at your price point? That’s where we come in. It’s important to work with a trusted luxury real estate professional who has deep connections, knowledge, and understanding of local housing market conditions – someone who understands your lifestyle, knows your wants and needs. At DMG, our connections are vast and our relationships are based in shared experience.
As the market evolves this spring, you may be pleasantly surprised. If you’re a seller, you may find that your home is worth more than it was in 2022. If you’re a buyer, you may find that there is a better pool of homes to choose from in your price range than in 2022. The decision of whether to buy or sell will always be unique and personal to the individual. Perhaps that’s the only reference point that really matters. DMG is always here to help guide you through this ever-changing real estate landscape.
SETTING NEW STANDARDS | PAGE 12
1. https://realestate.usnews.com/real-estate/agents/top-real-estate-companies/illinois#dawn
CHAPTER 3: LUXURY IN REVIEW 2022 | PAGES 14-25
1. https://winthropwealth.com/commentary/q22022-market-recap-and-outlook/#:~:text=invest%20new%20money%3F-,The%20 S%26P%20500%20decreased%20by%20%2D16.1%25%20in%20the%20second%20quarter,quarterly%20decline%20since%20 Q1%202020
CHAPTER 4: U.S. LUXURY OUTLOOK 2023 | PAGES 26-45
1. https://knowledge.wharton.upenn.edu/podcast/knowledge-at-wharton-podcast/less-is-more-redefining-the-luxury-goods-market/
2. https://www.cnbc.com/2022/05/25/how-to-prioritize-your-financial-goals-with-adult-kids-living-at-home.html
3. https://www.reuters.com/markets/us/futures-slip-last-trading-day-torrid-year-2022-12-30/#:~:text=by%20mid%2D2023.-,The%20 Dow%20Jones%20Industrial%20Average%20(.,or%200.11%25%2C%20to%2010%2C466.48.
4. https://www.blackknightinc.com/wp-content/uploads/2022/10/BKI_DR_OMM_Sept2022_Report.pdf?utm_source=prteam-outreach&utm_medium=press&utm_campaign=Corp_Combo_Combo_PR-Team-Outreach&utm_term=link&utm_ content=webpage
5. https://www.freddiemac.com/pmms,%20https:/www.realtor.com/news/trends/2023-the-year-of-the-homebuyer-our-boldpredictions-on-home-prices-mortgage-rates-and-more/
6. https://www.nar.realtor/magazine/real-estate-news/2023-real-estate-forecast-market-to-regain-normalcy
7. https://www.nar.realtor/sites/default/files/documents/2021-profile-of-home-staging-report-04-06-2021.pdf.
8. https://www.realtor.com/research/2023-national-housing-forecast/
1. https://money.com/vacation-house-starter-home-trend/
2. https://knowledge.wharton.upenn.edu/article/how-this-psychological-effect-skews-home-prices/
3. https://info.altrata.com/wx-wuwr-2022-download
4. https://www.forbes.com/sites/henley--partners/2022/10/18/the-emergence-of-a-new-class-of-super-rich-the-centimillionaire/?sh=2da174d76e75
5. https://www.barrons.com/articles/u-s-boasts-38-of-the-worlds-centi-millionaires-01674679280
6. https://www.nar.realtor/research-and-statistics
7. https://www.cnbc.com/2023/02/03/jobs-report-january-2023-.html
8. https://themortgagereports.com/61853/30-year-mortgage-rates-chart
9. https://www.marketplace.org/2023/02/02/have-homebuyers-adapted-to-higher-mortgage-rates/
10. https://www.realtor.com/advice/buy/the-massive-mistake-homebuyers-may-be-tempted-to-make-right-now-is-this-you-too/
CHAPTER 7: GLOBAL LUXURY OUTLOOK 2023 | PAGES 106-115
1. https://www.credit-suisse.com/media/assets/corporate/docs/about-us/research/publications/global-wealth-report-2022-en.pdf
2. https://www.worldbank.org/en/news/press-release/2023/01/10/global-economic-prospects
3. https://www.credit-suisse.com/about-us/en/reports-research/global-wealth-report.html
4. https://www.privatebank.bankofamerica.com/articles/wealth-study-2022.html
5. https://www.nar.realtor/sites/default/files/documents/2022-international-transactions-in-us-residential-real-estate-07-18-2022.pdf
For The Report 2023 the Institute for Luxury Home Marketing analyzed the data for the top 10% for up to 125 U.S. markets. Top 10% is defined as homes with sold prices (or in terms of inventory, list prices), matching or exceeding the 90th percentile sold price for homes sold in 2019, 2020, 2021, and 2022 in the specified city. Once these percentiles are determined, these become the thresholds for measuring each month’s data.
Data is calculated monthly from various sources to attain the most accurate set of information pertaining to parameters, as seen throughout this report, such as closed sales, active listings, sold prices, sold-price-to-listprice percentages, days on market, and sales ratios. Data is then represented both monthly and yearly throughout the report, using medians, averages, totals, percentages, and ratios. However, unless otherwise specified, statistics typically presented in this report represent both the monthly median and the median of monthly medians of the respective data.
The median was calculated by arranging the data in sequential order and selecting the middle number of the set, whether that number be a price, volume, number, percentage, or ratio. To determine the median of the monthly median, monthly medians are totaled, and the same method applied as for the monthly figure. Unless otherwise specified, all statistics are based on property sold. Inventory statistics are based on property available at the end of each month. Average Monthly Inventory and Average Monthly Sold statistics are based on the average of monthly property totals for each month. Sales Ratio is based on the ratio of Average Monthly Sold to Average Monthly Inventory.
Market Status is an analysis of Sales Ratio and represents
market speed and market type: Buyer’s = less than 15%; Balanced = 15% to less than 21%; Seller’s = 21% or greater. If greater than 100%, MLS data reported previous month’s sales exceeded remaining inventory pulled at the end of the month.
To provide data on the affluent with a net worth of $5 million+, Wealth-X, an Altrata company, uses their proprietary and recently updated Wealth and Investable Assets Model. This model produces statistically significant estimates for total private wealth and estimates the size of the population by level of wealth and investable assets for the world and each of the top 70 economies, which account for 98% of world GDP.
Wealth-X estimates total private wealth by using econometric techniques that incorporate a large number of national variables, such as stock market values, GDP, tax rates, income levels, and savings from sources such as the World Bank, International Monetary Fund, Organization for Economic Cooperation and Development, and national statistics authorities. Second, they estimate wealth distribution across each country’s population.
Wealth-X’s proprietary database of millions of records on the world’s wealthiest individuals enables them to construct wealth distribution patterns using real, rather than assumed, making the model more reliable. They then use the resulting Lorenz curves to distribute the net wealth of a country across its population.
Their model also estimates population, wealth, and investable assets for the world’s 200 major cities as ranked by nominal GDP in $. These cities are defined on the basis of urban agglomerations (UAs) and metropolitan (metro) areas, which include the built-up areas outside the administrative core, for example, New York includes New York City, Newark, and Jersey City. They focus on metro areas to ensure comparability because globally comparable city-level data is not available. They find that metro and urban areas are closer to self-contained entities compared with city administrative cores (city proper) because more residents are likely to work and spend within the metro/UA boundaries. They focus on metro areas to ensure comparability because globally comparable city-level data is not available.
Research conducted by Censuswide of 1,202 people with a household income of $1 million+ considering purchasing a luxury home. For the full methodology: blog.coldwellbanker.com/cbgl-2023-international-survey.
©2023 Coldwell Banker Real Estate LLC. All rights reserved. Coldwell Banker®, the Coldwell Banker Logo, Coldwell Banker Global Luxury®, and the Coldwell Banker Global Luxury Logo are registered service marks owned by Coldwell Banker Real Estate LLC in the United States and by Coldwell Banker LLC outside the United States. Coldwell Banker Real Estate LLC fully supports the principles of the Fair Housing Act and the Equal Opportunity Act. Each franchise is independently owned and operated.
The statistical information showcased through The Report for Coldwell Banker Global Luxury® has been compiled from various sources, including but not limited to Coldwell Banker’s Independent Sales Associates, Brokers, Brokerages, and Affiliates, Institute for Luxury Home Marketing, Wealth-X, an Altrata company, local MLS boards, local tax records, private and public sources, and Realtor.com. Data may not include private sales, as these transactions are not always reported through the above sources.
The Institute for Luxury Home Marketing publishes the Luxury Market Report on a monthly basis to measure market conditions for luxury real estate around the country and is prepared using statistical representation of the Median Price for each of the markets represented in its report. Information contained herein has been computed by the Institute for Luxury Home Marketing’s data research partner and shared with Coldwell Banker Global Luxury® and based on information attained both privately and publicly.
The data for this report is based on closed and recorded sides of homes sold during 2019, 2020, 2021, and 2022.
However, statistical information has been calculated using closed sales activity reported over a 48-month period from January 1, 2019, through December 31, 2022. Closed sales reported significantly later than this analysis period will not be included. All active status listing records were downloaded and processed to the same standards, at the end of each calendar month, from January 2019 through December 2022. Property-specific active and sales records were standardized, inaccurate list and sale prices were corrected when necessary, and all duplicate records were manually excluded. As a result, statistics available via the source data providers may not correlate to this analysis.
Although we believe that high standards have been used in the preparation of the information, analysis, and views presented, we take no responsibility or liability whatsoever for the contents. As not all private real estate activity is actively reported within its primary marketplaces, it is believed that not all property transfer data is included in this analysis. All the information is provided “as is,” and we make no express, implied, statutory, or other warranty of any kind or guarantee as to the accuracy, timeliness, completeness, efficacy, merchantability, and fitness for any particular purpose of any of the contents.
This data is considered to be reliable but is not guaranteed, either by the Institute for Luxury Home Marketing, its data research partner, or any participating MLS, Coldwell Banker Real Estate, LLC, Coldwell Banker Independent Sales Associates, Brokers, Brokerages, or Affiliates.
The information provided in this report is not a recommendation to buy or sell real estate, and when evaluating a particular property, it is recommended that specific comparable sales data is used in addition to this market trend information. As far as applicable laws allow, we do not accept responsibility for errors, inaccuracies, or omissions, nor for loss or damage that may result directly or indirectly from reliance on or use of its contents. Instead, it is recommended that all homeowners work directly with a licensed real estate agent or broker. Copyright ©2023. All rights reserved.
The Coldwell Banker® brand has a global reach with offices in 40 countries and territories, including the United States and Canada, and over 100,000 Independent Contractor Sales Associates/Representatives worldwide.
THE DAWN MCKENNA GROUP IS RENOWNED FOR REPRESENTING SOME OF THE MOST PRESTIGIOUS AND AFFLUENT CLIENTS IN CHICAGOLAND, NAPLES, LAKE GENEVA, HARBOR COUNTRY AND PARK CITY.
The Dawn McKenna Group experience is what happens when Local Expertise meets Global Reach.
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$3 BILLION IN CAREER SALES
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CLOSED OVER 620 TRANSACTIONS
CLOSED A HOME EVERY 15-HOURS
CLOSED OVER $640 MILLION IN SALES
CLOSED $17.5 MILLION PER DAY
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