Luxury Market Report North America
Guide to luxury real estate market data and trends for North America.
Produced with data from The Institute for Luxury Home Marketing which Barry is a member of, with the accredited CLHMS Certification.
The Luxury Market Report is a monthly analysis provided by The Institute.
Welcome to the Luxury Market Report for June 2021, 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.
MAP OF LUXURY RESIDENTIAL MARKETS
The Institute for Luxury Home Marketing has analyzed a number of metrics — including sales prices, sales volumes, number of sales, sales-price-to-list-price ratios, days on market and price-per-square-foot – to provide you a comprehensive North American Luxury Market report.
Additionally, we have further examined all of the individual luxury markets to provide both an overview and an in-depth analysis - including, where data is sufficient, a breakdown by luxury single-family homes and luxury attached homes.
It is our intention to include additional luxury markets on a continual basis. If your market is not featured, please contact us so we can implement the necessary qualification process. More in-depth reports on the luxury communities in your market are available as well.
Looking through this report, you will notice three distinct market statuses, Buyer's Market, Seller's Market, and Balanced Market. A Buyer's Market indicates that buyers have greater control over the price point. This market type is demonstrated by a substantial number of homes on the market and few sales, suggesting demand for residential properties is slow for that market and/or price point.
By contrast, a Seller's Market gives sellers greater control over the price point. Typically, this means there are few homes on the market and a generous demand, causing competition between buyers who ultimately drive sales prices higher.
A Balanced Market indicates that neither the buyers nor the sellers control the price point at which that property will sell and that there is neither a glut nor a lack of inventory. Typically,
this type of market sees a stabilization of both the list and sold price, the length of time the property is on the market as well as the expectancy amongst homeowners in their respective communities – so long as their home is priced in accordance with the current market value
REMAINING INVENTORY: The total number of homes available at the close of a month.
DAYS ON MARKET: Measures the number of days a home is available on the market before a purchase offer is accepted.
LUXURY BENCHMARK PRICE: The price point that marks the transition from traditional homes to luxury homes.
NEW LISTINGS: The number of homes that entered the market during the current month.
PRICE PER SQUARE FOOT: Measures the dollar amount of the home's price for an individual square foot.
SALES RATIO: Sales Ratio defines market speed and determines whether the market currently favors buyers or sellers. Buyer's Market = up to 14%; Balanced Market = 15 to 20%; Seller's Market = 21% plus. If >100%, sales from previous month exceed current inventory.
SP/LP RATIO: The Sales Price/List Price Ratio compares the value of the sold price to the value of the list price.
“Supply isn’t just being reduced by the affluent buying additional properties, it was also highly impacted by the seniors, baby boomers, and empty nesters who decided to stay in place. Each spring we typically see a vast number of listings entering the market from this demographic as they chose to downsize or relocate.
It is predicted that the 2020 and early 2021 “stay in place trend” will start to change and homes will slowly trickle back on to the market, especially if the pandemic continues to remain manageable.”
NORTH AMERICAN LUXURY REVIEW
Key Drivers Controlling the Luxury Real Estate Market
The last 12 months have seen a gradual alignment of influential factors leading to a perfect storm of high demand for luxury properties throughout North America. This, in turn, has created a challenge for those looking to predict when and what factors will cause this demand to slow.
While it must be recognized that every luxury market has its own nuances, this month’s report reviews several of the key drivers in the supply and demand chain that are dictating this continued trend, as well as influencing factors for the future of luxury real estate.
To truly appreciate the change in the luxury market, it is important to understand that the highend property market typically reports the highest percentage of inventory versus sales each month in comparison to other property segments. Pre-pandemic, multi-million dollar estates commonly remained on the market for many months.
In today’s market, the demand for larger homes, estates, and mansions with land has been so great that properties that were previously less desirable are also selling quickly. In fact, many owners in tune to today’s trends have renovated their older and dated properties to capture this market opportunity.
According to the National Association of Realtors, the number of homes that sold for more than $1 million rose by 81% in February 2021 compared to February 2020. In the Midwest, the number doubled in the same period. In the Northeast, volume increased by 98%. In the South, it was up by 94%.
It is actually at this point that rhetoric and statistics begin to contradict each other. While recent ‘sold’ data does report a record number of sales, increased prices, sales over asking price, and all-time low marketing time, there is actually still a good percentage of properties that have been actively registered on the market for significant periods of time.
The great divergence between the rhetoric that all luxury properties are in high demand, isn’t because these homes are not wanted, it’s because, despite all the frenzied buying, the affluent are still savvy buyers. They will rarely buy a property they consider overpriced and the majority do not have the time, nor the interest, to purchase a home that is not to their standard of move-in ready.
These overpriced facts are borne out by the steadily monthly growing difference between the median list prices of homes remaining on the market versus the median selling price of sold properties – as depicted on the 13-month trend graph on page 9.
Looking at the comparable median prices for May, stated on pages 10 and 11, the differences are even more apparent. Luxury single-family homes show a 17.3% price difference between properties listed versus sold in May 2020, yet in May 2021 the difference has increased significantly to 25.83%.
In the attached luxury property market, the difference is not as obvious, because overall the demand has been slower. However, because inventory levels are also lower than normal, there is still a growing divergence - in May 2020 the difference was 12.99% and in May 2021 it was 20.67%.
That being said, as we review the data for April and May 2021, statistics show that while inventory levels are increasing, they are still approximately 38% lower compared to the same period in 2019 (pre-COVID-19). If we were to remove the overpriced properties, then this percentage would obviously grow still higher.
Supply isn’t just being reduced by the affluent buying additional properties, it was also highly impacted by the seniors, baby boomers, and empty nesters who decided to stay in place. Each spring we typically see a vast number of listings entering the market from this demographic as they chose to downsize or relocate. It is predicted that the 2020 and early 2021 “stay in place trend” will start to change and homes will slowly trickle back on to the market, especially if the pandemic continues to remain manageable.
Equally, insufficient building and construction during the pandemic affected new supply over the last 12 months, and now with the rising cost of materials – in particular lumber – private and developer projects are remaining on hold, further delaying new inventory entering the market.
Luxury properties and developments that have completed and even pre-development properties are experiencing unprecedented demand.
This lack of supply is proving to one of the most significant reasons that demand is so high for properties that do meet affluent buyer’s requirements. The demographic and level of demand has also changed over the last 12 months.
One the major drivers of demand is the emergence of the millennial generation as a major buying force. The majority of affluent millennials are in their 30s. Now that many of them can work from home, their desires to start a family coupled with the ability to relocate to a lower density community, not to mention securing a low-interest mortgage, create a perfect storm in favor of purchasing rather than renting.
The change of buying direction for baby boomers has also affected home purchases, as many have switched gears due to pandemic-related health concerns of living in densely populated areas. Prepandemic trends had seen this demographic, typically empty nesters, aged 50 between 70, moving back into urban luxury condominiums to enjoy a lifestyle full of city amenities. Many have elected to fast track their plans, skipping this transitional stage, and are instead buying their ultimate retirement property now, purchasing in secondary or resort communities.
Another driver of demand for luxury properties has been the significant increase in both the number of wealthy and the growth of wealth for many high net worth individuals. Economists show that the pandemic caused a broad divergence in fortunes, as we entered into a K-shaped economy. Many workers in industries such as tourism, hospitality, and retail were the hardest hit with unemployment and lost wages, whereas white-collar industries such as finance and technology were able to adjust quickly and manage their systems by working from home.
Not only did the earnings of many of wealthy rise but their level of savings increased too, as restrictions prevented normal spending on travel, hospitality, and retail. This gave them the means to buy, helped further more by historically low mortgage rates and soaring stock prices, which further padded their wealth, and thereby enabled them to purchase higher-priced properties.
If these trends continue, then predictions are that the luxury housing market will stay very much a seller’s market for the next 12 months. However, initial data analysis for May 2021 might be the indicator of the market settling, as more homes have started to trickle on to the market and there have been price reductions for homes that have been on the market for over 90 days. We will, of course, continue to watch to determine if there is a new trend emerging as we move forward in the summer and fall markets.
The art of selling and buying in this market needs a critical and analytical approach, understanding the realities and setting expectations accordingly will ensure that goals are achieved. For homeowners looking to sell their luxury home in today’s market, we recommend working with a Realtor who can capitalize on the preferences of current investors.
A Review of Key Market Differences Year over Year - Single Family Homes
May 2020 | May 2021
Median List Price $1,594,556 $1,809,950
Median Sale Price $1,318,750 $1,342,500
Median SP/LP Ratio 96.87% 100.00%
Total Sales Ratio 13.78% 75.09%
Median Price per Sq. Ft. $353 $411
Total Inventory 48,486 28,376
New Listings 13,846 12,850
Total Sold 6,681 21,307
Median Days on Market 35 11
Average Home Size 3,726 3,388
SINGLE-FAMILY HOMES MARKET SUMMARY | MAY 2021
• Official Market Type: Seller's Market with a 75.09% Sales Ratio.1
• Homes are selling for an average of 100.00% of list price.
• The median luxury threshold2 price is $942,500, and the median luxury home sales price is $1,342,500.
• Markets with the Highest Median Sales Price: Palm Beach Towns ($4,698,900), Santa Barbara ($3,800,000), Naples ($3,725,000), and San Francisco ($3,725,000).
• Markets with the Highest Sales Ratio: East Bay (379%), Sacramento (250%), GTA-Durham (239%) and Ada County (209%).
A Review of Key Market Differences Year over Year - ATTACHED HOMES / Condo Type
May 2020 | May 2021
Median List Price $985,500 $1,075,000
Median Sale Price $857,500 $885,000
Median SP/LP Ratio 98.01% 100.00%
Total Sales Ratio 9.25% 47.43%
Median Price per Sq. Ft. $443 $508
Total Inventory 17,457 12,265
New Listings 4,451 4,404
Total Sold 1,615 5,817
Median Days on Market 36 13
Average Home Size 2,117 1,957
ATTACHED HOMES MARKET SUMMARY | MAY 2021
• Official Market Type: Seller's Market with a 47.43% Sales Ratio.1
• Attached homes are selling for an average of 100.00% of list price.
• The median luxury threshold2 price is $700,000, and the median attached luxury sale price is $885,000.
• Markets with the Highest Median Sales Price: Vail ($2,375,000), San Francisco ($2,350,000), Park City ($2,095,000), and Greater Boston ($1,825,000).
• Markets with the Highest Sales Ratio: Central Coast (429%), Sacramento (250%), GTA-Durham (239%) and Ada County (209%).
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Inventory remains low overall, but we do continue to list and market new properties to the marketplace and we sell many different type homes; Resale & New Construction; Multigenerational Family Compounds, Regular Single Family Homes, Villas, Townhomes and all Condo types, from low rise, to waterfront high rise right on the beach.
We have also seen an uptake in people planning ahead, and buying that second home now, rather than waitiang as they were planning to do; especially with Snowmads and Zoombirds. Previously we had Snowbirds; interesting how terminology keeps changing.
Lower interest rates are probably helping with the increased sales; oftentimes over asking price. Low inventory is the greatest chalenge for buyers; but if prepared you are ahead of the game; ask how we can help. We recently got an amazing deal for a buyer on a Waterfront Condo with Boat Dock; and we are working on others; so there are deals out there; if you work with us, we will find them.
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- Kelly McL - Three Naples Florida Homes
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- Ed & Lorrie
- Jeff and Tammy Brown
- E. K.
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- Mike Schmidt
- Susan Carter
- Tom B (Naples FL)
- Scott Arbuckle
- Rob Sanchez
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- Chip Servant
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- Ming Chiu & Ying Zhang-Chiu
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- Nate and Heather - Naples FL Condo
- THE TOTH FAMILY
- Dennis and Mary Fuelling
- Sally and Tom
- Tammy Ambrose
- Jacque Turner
- Adriana and Gerald - Sellers who we achieved 12% over full price for a home listed previously by other agents, who were not successful in selling it for a lower list price
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- Brenda and Tom (Seller & Buyer as part of Up-sizing Relocation within SWFL)
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