WELCOME MESSAGE

THIS IS YOUR LUXURY MARKET REPORT

MAP OF LUXURY RESIDENTIAL MARKETS

Welcome to the Luxury Market Report, your guide to luxury real estate market data and trends for North America. Produced monthly by The Institute for Luxury Home Marketing, this report

provides an in-depth look at the top residential markets across the United States and Canada. Within the

individual markets, you will find established luxury benchmark prices and detailed survey of luxury active and

sold properties designed to showcase current market status and recent trends. The national report illustrates

a compilation of the top North American markets to review overall standards and trends.

Copyright © 2021 Institute for Luxury Home Marketing | www.luxuryhomemarketing.com | 214.485.3000 The Luxury Market Report is a monthly analysis provided by The Institute for Luxury Home Marketing. Luxury benchmark prices are determined by The Institute. This active and sold data has been compiled by various sources, including local MLS boards, local tax records and Realtor.com. Data is deemed reliable to the best of our knowledge, but is not guaranteed.

NORTH AMERICAN LUXURY REVIEW

Demand vs Supply: Compromises and Changes expected this Winter

As we approach the winter season, when the nights grow longer and days cooler for the majority of North America, sales in the luxury real estate market typically start to slow down. Sales in the last four months of 2020 certainly proved to an exception to the rule, as they not only broke records over previous years’ numbers, but actually increased month over month.

Although, the last quarter of 2021 is not expected to provide such dramatic increases in sales as 2020, there is a new significant trend currently impacting the luxury market. Overall, the demand for luxury properties in North America is outpacing the supply of properties entering the market. This explains why inventory levels continue to decline in the luxury market.

Taking a closer look at the data on pages 12-19 and its clear to see that most luxury markets favor sellers rather than buyers. This is further qualified by the significantly higher number of properties being sold in the majority of these markets, in comparison to the number of new listings entering the market.

Across the 116 markets showcased in October 2021’s luxury market report, the number of sold properties was 37% higher than the number of new listings for that month. In this month’s report the difference is even higher at 55.5% more sales than new listings.

To put that into context, in 2020 the number of properties entering the market in September was 9% higher than the number sold. October’s figures showed that the number of listings entering the market had fallen, they were still slightly higher by 1% than the number of sold.

This does not mean that there is no inventory; there are properties still available from months where inventory did exceed demand as well as new construction homes and developments. But it does indicate that buyers need to recognize that finding their new home will still be challenging and that waiting may not pay off if they are looking for prices to fall.

The levels of demand and supply are certainly not equal across all luxury real estate markets, nor are they for specific price points, property types, location, and other variables that make up buyer’s deciding factors. This disparity of choice is the main reason why there is still inventory available.

The bigger question for this quarter is whether inventory levels will continue to decline? Not just because we are approaching the typically quieter real estate months of winter, but because buyers, keen to purchase, seem more than ready to compromise and revisit the priority of their requirements.

With the ski season fast approaching as well as snowbirds looking to escape their wintery landscapes, real estate professionals have started to see a shift in what their buyers are willing to accept in order to purchase a home in their desired destination.

Coveted locations in these destinations are very obvious from ski-in/out properties to beach and lake side resorts or homes with private docks and water access. But the word is that, although these homes are currently limited in their availability, buyers have started to negotiate and if the seller remains unrealistic, they are willing to walk away.

A turnkey property with modern features and amenities in the best location may be their goal, but as many of these new buyers are no longer looking for a vacation property but a co-primary residence, especially if they are able to work from home, they are willing to compromise. As many prices are currently at their highest levels, savvy buyers are reviewing both the future prospects of the destination as well as the resale value potential of the home.

To this end, the choice of buying an older property that needs renovations is becoming one of more popular compromises. The ability to own two primary residences allows them the time and space in which to complete the renovations and add value to their property.

Not purchasing in the destination’s prime locations is another compromise, as these co-primary homeowners are typically looking for different features such as larger properties with more outdoor space. Being in heart of the busy downtown, positioned river or beachside or ski-in/out becomes less crucial when it’s no longer a vacation property but a true second primary home.

On the flip side of the coin are the buyers who are looking to return to their cities, mostly due to work obligations. While there certainly has been a significant upswing in the number of sales within the downtown cores of metropolitan cities, there is also a trend by the affluent to hedge their bets.

At the start of the pandemic, we saw numerous affluent homeowners escape the city for either destination locations or the exurbs. Working from home meant that location choices were not often based on commute times. For the most part those who are now choosing to move recognize that commuting is again an important factor and are looking for options that will allow them to work part-time in the city and the rest from home.

While some have chosen to purchase a pied-à-terre in the city to stay at for a few nights a week, others are not ready to split their time between city living and family home. Real estate professionals are reporting a change in the desirability for ownership in suburban communities, especially those offering commute times under 1 hour, which are seeing increased demand.