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Luxury Properties

Quick Takeaways

  • The luxury home sector is less affected by economic changes than the rest of the market, most likely due to a higher rate of cash purchases, less dependence on the job market, and buyers with more geographical flexibility.
  • Desired amenities are not what they used to be – the pandemic brought outdoor space and home offices back to a premium not seen in years, while an increase in “staycations” have tied pools with offices as the second most popular amenity.
  • Currently, the luxury market is hottest in the Southern United States. Both Austin and Miami have seen huge growth, replacing the classic luxury destinations of California and New York.

Source: 7 Luxury Real Estate Market Trends & How to Buy a Luxury Home in 2022 (2022)

In 2021, 13% of repeat and first-time homebuyers had household incomes of $200,000 or more, while 20% of first-time and repeat home buyers bought homes priced at over $500,000. Additionally, 10% of first-time and repeat home buyers purchased homes over 3,501 square feet.

The luxury housing market has not quite faced the same level of upheaval the rest of the market has seen in the past few years. More cash offers mean less buyers worrying about rising interest rates and a volatile economy. One of the hottest luxury trends is purchasing a large swath of land out west, specifically Montana.

Working with luxury buyers requires its own set of skills and knowledge. Familiarizing yourself with luxury trends, brands, and even hobbies will help set yourself up for success in the luxury sector. Luxury buyers are looking for vacation-like backyards, at home offices, and restaurant worthy kitchens.

See References for more information.

Latest on this topic

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References

NAR Library & Archives has already done the research for you. References (formerly Field Guides) offer links to articles, eBooks, websites, statistics, and more to provide a comprehensive overview of perspectives. EBSCO articles (E) are available only to NAR members and require the member's nar.realtor login.

Facts About Affluent Homebuyers

  • Percent of first-time and repeat buyers with household incomes of $200,000 or more: 13%
  • Percent of first-time and repeat buyers who bought homes priced $500,000 and more: 20%
  • Percent of first-time and repeat buyers who bought homes 3,501 sq ft or more: 10%

Source: 2021 Profile of Home Buyers and Sellers

The Luxury Property Market

The Montana Land Rush (Town & Country, Jun. 8, 2022)

“In 2022 owning land in the west is the pinnacle of acquisition. “Look at it this way,” says Jim Manley, the owner of the Ranch at Rock Creek. “You’re a billionaire and you’ve already got everything. You’ve got a jet, you’ve got a house in the Hamptons—but you don’t have a ranch. And all of a sudden you see Kevin Costner shooting the bad guys in Yellowstone [Taylor Sheridan’s smash hit neo-western] and the gorgeous Montana scenery. And you say, ‘Hey, that’s cool. I got the money. I could do that.’ So they did, sparking a Manifest Destiny–style land-buying frenzy.”

2022 Forecast for San Diego’s Luxury Housing Market Stays Bright (Forbes, Jun. 7, 2022)

“A decade ago, factories and hotels were the prime targets for adaptive reuse. Now, former offices comprise 41% of all US apartments converted during the past two years, according to RentCafe. They are also the most popular building type for future adaptive reuse projects, creating one-quarter of the 52,700 residential units expected to become available in the US in 2022 (a figure that’s up from 6,960 in 2012). Remote-work and hybrid schemes have led companies to reduce the footprint of their offices, lowering demand and increasing supply. Meanwhile, the heated housing market has left developers eager to transform ageing assets into prime residential real estate.”

Multimillion-dollar Home Sales in Philly Have Reached Record Levels as Prices and remote working increase (The Philadelphia Inquirer, May 16, 2022)

“At least 87 homes priced at $1 million or above sold in the first three months of the year, according to Drexel economist Kevin Gillen’s analysis of multiple listing service data. In the same period last year, Philadelphia buyers purchased 32 of these homes. In the years before the pandemic, home sales at that price point averaged 97 for the entire year.”

The Office Spaces Transforming into Luxury Apartments (BBC, May 11, 2022)

“A decade ago, factories and hotels were the prime targets for adaptive reuse. Now, former offices comprise 41% of all US apartments converted during the past two years, according to RentCafe. They are also the most popular building type for future adaptive reuse projects, creating one-quarter of the 52,700 residential units expected to become available in the US in 2022 (a figure that’s up from 6,960 in 2012).”

Marketing t​o the Millionaire: Profile, Preferences, and More

Luxury Home Buyers are Spending Less – But They'll Still Come Off Better Than the Average Buyer, a Florida Real-Estate Agent Says (Business Insider, Jun. 4, 2022)

Luxury home buyers are not facing the same housing market as the rest of the United States, or rather, the rising mortgage rates and low inventory of affordable homes has not affected them – yet.  A larger number of luxury buyers use all cash to purchase homes, so the rising mortgage rates have not affected their home buying ability. Additionally, buyers conscious of inflation are looking for safe investments. At this point in time, real estate is often safer than the stock market.

Luxury Portfolio International® Creates First-ever 'Luxury Dream Home' Model Based on Top 7 Demands of High-Net-Worth Buyers (Cision PR Newswire, May 11, 2022)

According to a new report, State of Luxury Real Estate,  the prevailing luxury home trends are as follows:

  • “A residence that evokes a joyful, satisfying life
  • Outdoors reimagined as an adult playscape
  • Sustainability as a focus, not an afterthought
  • A sense of peace and wellbeing
  • Elevated security
  • A souped up, gadget-filled kitchen as the centerpiece
  • At-home services and a seamless ability to outsource chores”

How to Become a Luxury Real Estate Agent—10 Easy Ways to Break Into the Luxury Market (The Close, Mar. 18, 2022)

The luxury market requires its own set of skills, and these ten tips will help you get one step closer to gaining luxury clientele; adopt a new hobby, make luxury part of your personal brand, get involved with charities, pay attention to details, familiarize yourself with luxury real estate issues, teach a course, obtain certifications like your Luxury Home Certification, co-list with a star agent, explore expired luxury listings, and get into new construction!

eBooks & O​ther Resources 

eBooks.r​ealtor.org

The following eBooks and digital audiobooks are available to NAR members:

12 Secret Luxury Home Buyers Know (Audiobook, eBook)

The Luxury Strategy (Audiobook, eBook)

Luxury Brand Management (Audiobook, eBook)

Selling Luxury (Audiobook, eBook)

Selling Luxury Homes (Audiobook, eBook)

Books, Videos, Research Reports & More

As a member benefit, the following resources and more are available for loan through the NAR Library. Items will be mailed directly to you or made available for pickup at the REALTOR® Building in Chicago.

Selling Luxury Homes: Become the Preferred Real Estate and Trusted Advisor to High-end Clients in Your Market (Windsor, CT: Tide-Mark Press, 2010)

The World of Luxury Real Estate (CreateSpace, 2007)

Rich Buyer, Rich Seller: The Real Estate Agents Guide to Marketing Luxury Homes (Institute for Luxury Home Marketing, 2003)

Trading Up: The New American Luxury (New York, NY: Portfolio, 2003)

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