Going into 2023, many agents are curious about what the market will look like. Although demand has slowed down and available inventory has seen an increase, luxury real estate remains an outlier. When it comes to high-end housing, inventory hasn’t caught up with current demand.
With 2023 rapidly approaching, a serious demand for luxury listings and too few builders are expected to keep prices from seeing any dramatic declines.
Who comprises the luxury home market?
According to Engel & Völker’s trend report on luxury homebuyers, millennials comprise more than half (59%) of the consumers looking to purchase a home over $3 million. That’s a crucial number for real estate agents to know as they target the luxury market in 2023.
A potentially even more important point for real estate professionals to keep in mind is that two-thirds of these buyers report having remote jobs and the ability to work from wherever they choose. This has led nearly all of them to either currently own, or be in the planning process of owning, a second home.
Those with emerging affluence, defined in the report as first-time millennials and Gen Z homebuyers who make over $100,000 in household income annually, were more likely to move to a new city this year. When making the move, the most important factors included neighborhood vibe, walkability and proximity to restaurants and work. For these reasons, working with real estate professionals with local expertise is ideal.
“For real estate professionals serving the luxury segment, it’s important to understand and adapt to the evolving preferences of new generations who are taking up more space in the market,” said Anthony Hitt, president and CEO, Engel & Völkers Americas.
International property seekers
Data from Coldwell Banker Global Luxury’s 2022 Trend Report found that many consumers hope to purchase a home in their dream location, specifically referring to international properties. A whopping 40% of consumers reported a higher quality of living or potential investment opportunities as their motivation for wanting to buy abroad.
Additionally, 67% of Americans surveyed already own residential real estate outside the US. Still, these consumers are open to expanding their real estate portfolio and looking into their next investment opportunity overseas.
Engel & Völker’s report found that 62% of luxury buyers in North America who were looking to purchase outside the continent were either millennials or Gen Z.
Searching for a second home
Luxury homebuyers in the market for a second property were found most likely to be married millennials or Gen X with children living at home. Of these consumers, one-third will be looking to purchase in a region they find convenient for recreational activities and home amenities such as pools, gyms and spas, according to Engel and Völker’s report.
This adds even more weight to the importance of finding a real estate professional with regional expertise.
What does it mean for 2023?
Successfully breaking into the luxury home market in 2023 means getting to know what buyers want. With a keen understanding of buyer trends, a finger on the pulse of the local neighborhoods and a smart social media strategy, professionals can help meet the rising demand for luxury properties.
