The luxury real estate market is enjoying a boom as the COVID-19 pandemic rages on, and a number of factors are feeding into the trend, according to analysts. Compared with the same time period in 2019, demand for high-end homes leapt 42% in the third quarter of last year, according to a report from Redfin.com. That is the largest recorded increase since the organization began tracking the data in 2013. At the same time, sales of lower-priced homes slowed as inventory dwindled. Redfin experts noted that the luxury housing market typically suffers in the midst of a recession, but the economic impact of the pandemic has been different than that of a typical recession, impacting households at differing income levels unequally.
The surge in luxury home sales and the slowing sales, year over year, of affordable housing (down 4.2% and 4.8% respectively) is attributed to several causes.
Americans on the lower end of the earning spectrum were more likely to be deemed essential workers, necessitating continued renting or staying at housing near city centers to allow for ease of commuting. More, with job losses due to the pandemic, and hundreds of thousands of Americans filing for unemployment benefits each week, purchasing new homes simply wasn't on the radar for lower-income Americans in the third quarter.
The wide-ranging difference between the affordable housing sector and the luxury market seemed to indicate a growing economic divide in the nation. For the third quarter, analysts also reported that the wealth of the world's 500 richest individuals grew by a total of $813 billion this year. At the same time, there were a number of other benefits on which wealthy Americans (even those who didn't make the 500 richest list) could capitalize.
First, mortgage rates continued to be near record lows, providing an attractive incentive to luxury home buyers. In addition, stock market performance remained robust with strong stock prices. Meanwhile, a shift to remote work has Americans of means rethinking what the home office can look like — and where it should be. This new flexibility mindset has led to luxury buyers seeking homes in suburban areas and vacation destinations, outfitted with amenities they only dreamed about until now. For many, that includes multiple, spacious home offices for at-home schooling and professional needs and large backyards — typically an oasis-like setting away from the thrum of the city and the pandemic risk that comes with it.
We're also seeing an uptick in interest in multigenerational homes, often in the luxury market, as the sandwich generation considers alternatives to long-term housing for their parents in the midst of the pandemic.
Whether more time at home has you dreaming of a larger property, a better location, additional office space, or specific amenities you don't have now, we can help. While the luxury housing market is hot, our luxury real estate experts can ensure you find the property that's right for you and your family's needs. Contact us to learn more about luxury properties on the market in the 7 Rivers Region and beyond.