The Institute’s Luxury Market Report is your guide to an analysis on the trends and comparative data on the top-residential markets throughout Canada and the United States.
April’s report reviews the current statistics for the luxury market in North America month over month, as well as the 13-month trend.
The Institute for Luxury Home Marketing both appreciates and recognizes the impacts that the Coronavirus pandemic will have globally on both human life and economically… and that it is highly unlikely that the luxury real estate market will remain immune from its effects.
However, at this time the figures for the luxury real estate market for the first quarter of 2020 showed very little slow down and are higher compared to the same period in 2019.
The report gives a detailed explanation and statistics that show this is due to a strong rebound in the last quarter of 2019 which then continued into the start of 2020. The luxury market numbers continued to trend up even into March for both single-family and attached properties.
According to Realtor.com’s Chief Economist Danielle Hale, who stated during her recent interview with RIS Media, “A low-interest-rate environment combined with a flourishing economy and record-setting stock markets pushed luxury sales into the double digits for the first time as 2019 came to an end.”
While many experts are predicting a 30-35% drop in inventory during April, at this current time there seem to be little signs of panic selling and property prices are remaining fairly steady. Real estate transactions are still moving forward and the recent pause over that last couple of weeks gave many the opportunity to calmly assess how to work within this new environment.
For an industry that 10 years ago would have shut down during this crisis, we review the effects of increasing inclusion of technology and online capabilities. How this has enabled not only the industry to carry on but how the ingenuity and collaboration of associated services are opening up a new way of doing business, which will probably change how transactions are conducted in the future.
Homeowners looking to sell or buy their luxury home in today’s market are cautioned to work with a Realtor who can provide critical knowledge of local markets, maintain a high level of security during transactions and are experts in leveraging technology to provide maximum exposure of their home on all social media channels and internet outlets.
It’s a brand new year, and if you’re wondering how to sell luxury listings in 2020, look no further than your own backyard. Our January report reveals that luxury home sales are on the rise in the US and Canada, with the majority of buyers coming from the states.
In addition to an increase in sales, the market is also showing an increase in both listing price and sold price. One prediction is that the market will continue to strengthen going into Spring.
Whether or not you’re already a Certified Luxury Home Marketing Specialist, this is good news. These trends show confidence in the market, meaning that both affluent buyers and sellers are actively looking for your expertise to help them buy and sell.
So if you don’t already have your Certified Luxury Home Marketing Specialist certification, this is a great year to earn it and get access to its exclusive benefits and network. With the market picking back up and trends moving quickly, having your designation will help you stand out and give you the tools you need to solidify your success.
Either way, let’s take a look at what this month’s report means for your luxury home marketing strategy.
HONE IN ON YOUR FEEDER MARKETS
Since the market is seeing plenty of transactions happening within the US, staying connected to your feeder markets can help add listings to your inventory.
Understanding why prospects are relocating to your local market (or away from it!) can help you fine-tune your marketing strategy to put you on their radar. Are you in a favorable tax state? Or on the flip side, if you’re in a state like California or New York experiencing higher taxes, could your practice benefit from becoming the go-to Certified Luxury Home Marketing Specialist for those wanting to list their home and escape the new financial burden?
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The beginning of every year sees experts crawling out of the wood work with predictions in hand. The question on everyone mind this year revolves around the 2020 real estate market. Will it be steady? Will it be rocky?
The answers are in and they seem unanimous. We won’t see a recession or a depression as some have predicted. What will see is a slower and smaller market.
This may not spell great news for everyone though. Slower means healthier and smaller means more affordable. Yes, we expect a slower market than we’ve become accustomed to the last few years.
Buyers shouldn’t mistake this for a buyer-friendly environment. Consumers will continue to absorb available inventory. The market will remain competitive throughout much of the country.
National Trends That Will Dominate
There’s a national story and a local story. That’s been true every year. This year ‘location, location, location’ may mean a whole lot more to home buyers than in previous years.
There’s another unusual characteristic to the predictions of this year’s trends. They expect these trends to last for the next decade!
The United States Will NOT Enter a Recession in 2020
A survey conducted by Zillow of economic experts expected a recession in the US in 2020. They went further and suggested a shrinking economy by 2021. They cited possible causes such as trade volatility, a geopolitical crisis occurring, or a stock market retreat.
We’re a tough economy though and these conditions aren’t likely to happen as of now. Consumer spending bounced back in October after a slowdown in late summer. It’s continuing on a steady course and isn’t expected to be knocked off track.
Consumer confidence is up. This happened despite some modest declines in it lately. It bounced back, still remains at high levels and points to continued growth in the near term.
Employers are adding jobs at a decent rate. Our unemployment rates are at near record lows. This helps push wage growth up. It’s been at or above 3% per year since October 2018.
It’s important to be mindful of what could happen. The threat to the economy from trade volatility is real. The manufacturing sector of the economy in particular has been hit hard lately after steadily building orders throughout much of 2018.
The stock market itself, while still testing new highs, is very sensitive to ongoing trade discussions. This is a reflection of overall investor faith and business leaders’ confidence in their ability to make effective, long-term, strategic decisions.
Finally, the potential for a minor conflict in any corner of the globe to become bigger at any time cannot and should not be ignored.
Small is the New Big
Bye bye McMansions. The trend has slowly been dying out.
The new single-family home dimensions are roughly one-third smaller than 2015.
Expect single family homes to be less about size and more about amenities.
First, the fine print: Yes, today’s new single-family home is roughly a third larger than it was 30 years ago, up to a median of 2,386 square feet in 2018 from 1,810 in 1988. But it’s also true that between 2015 and 2018 (despite a very slight increase between ’16 and ’17) the typical square footage of those homes fell from 2,467 to 2,386 – the largest such drop since at least 1988, not including the housing crash in the mid-aughts.
There are several 50,000-foot reasons why we expect this gentle downsizing to continue:
- Many of today’s younger, millennial home buyers have expressed a preference for denser, more urban homes that are more walkable to shared amenities.
- Younger buyers are struggling to afford large homes built in prior decades
- Eco-consciousness is also growing broadly.
- Today’s older homeowners are expressing a desire for smaller, less maintenance-heavy and more accessible (read: fewer stairs) homes as they age and move into newer homes. In 2019, 56% of new construction home buyers were 40 or older, according to the 2019 Zillow Group Consumer Housing Trends Report.
- Home builders are constrained by a shortage of buildable land in desirable areas. Prices on key building materials including lumber and steel are increasingly volatile. And competition for skilled construction labor is fierce, pushing wages up.
Each of these trends points to a continuation of this downsizing of new homes – smaller homes are inherently more dense, walkable and affordable; smaller homes are efficient and eco-friendly; smaller homes require less maintenance and are more accessible; smaller homes enable builders to do more with less.
There will always be demand for large, suburban homes on big lots – but on net, we expect attitudes to shift away from that and toward a lifestyle with a smaller footprint.
Home Value And Rent Growth Will Be Slower, More Stable and More Sustainable
Since hitting a recent high of 8.3% in December, annual growth in the median U.S. home value has been slower than the month prior in every month so far in 2019 – currently standing at 4.7% in October (the latest month for which data is available as of this writing). At the same time, annual rent growth – while largely stable – has crept up modestly in each month since June.
In 2020, we expect both rent and home value growth to slow somewhat further, stabilizing at a sustainable pace in line with wage growth and inflation and to a level indicative of greater balance between buyers and sellers, tenants and landlords.
The median U.S. home value is expected to end 2020 up 2.8 percent from the end of 2019, according to the Q4 2019 Zillow Home Price Expectations Survey, a quarterly survey of more than 100 economists and experts sponsored by Zillow and conducted by Pulsenomics. That’s down from the average prediction of 3.6% annual growth expected from the same panel by the end of 2019 compared to the end of 2018. Since 1996, the average annual pace of growth in the Zillow Home Value Index is 3.8%, so a slowdown from current levels would still represent a return to long-term norms.
On the rental side, annual rent appreciation has been on the rise since June and currently sits at about 2.3%. We expect this recent uptick in rental growth to continue through the start of 2020 before petering out sometime around the start of Spring. By the end of next year, we expect annual rent growth to fall below two percent, or about a half a percentage point lower than where they currently stand.
By keeping monthly mortgage payments within reach even as home prices rise, continued low mortgage interest rates will help ensure that rent growth doesn’t again reach the highs experienced just a few years ago. Low rates will encourage more renters to pursue homeownership, further boosting overall homeownership rates that have been on the rise since 2016.
Mortgage Rates Will Stay Low, Keeping Housing Demand High
Mortgage rates fell markedly in 2019, and are expected to remain near their current, relatively low levels for the bulk of 2020. Softening GDP growth and investment, continued global weakness due in part to the U.S.-China trade conflict, and below-target inflation will continue to hold rates in check. Barring marked improvements in these indicators, the Fed will have no reason to return to rate hikes.
If low mortgage rates persist, this will keep home purchase demand strong and continue to fuel decent price growth in the nation’s most broadly affordable markets. But low rates won’t be enough to reignite high growth rates in the nation’s highest-priced markets, notably on the West Coast and in the Northeast. In these markets, buyers seem to have hit an affordability ceiling where even low rates can’t bring many homes into the typical first-time buyer’s budget range, especially because low rates don’t help overcome the upfront hurdle of high down payment requirements. In those high-priced markets, buyers will continue to fan out in search of more affordable areas.
Color Will Make a Comeback
Goodbye, Hygge (look it up). Hello, color! Fun will return to home design in the form of bold prints, lively wallpaper and brightly hued walls. After a decade of Scandinavian modern design that dominated retail and social media feeds as Americans embraced neutrals, minimalism and clutter-free living, expect a shift toward playful, creative design. Look for color to be injected in unexpected ways in kitchen cabinetry and appliances, in lighting fixtures and on interior doors and moldings.
Home Sales will climb slightly and slowly
After bottoming out in January 2010 during the depths of the housing crash, overall annual U.S. existing home sales didn’t consistently top 5 million until late 2014. By late 2016, a growing number of first-time home buyers drove the annualized rate of national home sales to bounce around 5.5 million for over a year.
But by spring 2018, things started to turn down again: The seasonalized annual sales rate dropped back to 5 million by December 2018, and the impact of rising mortgage rates and the increasing difficulty in saving for an adequate down payment were the talk of the town. As sales pulled back, available inventory started to swell and what had been aggressive home value appreciation began to slow.
But 2019 brought another swing. Home value growth continued to soften, but mortgage rates came back down, what inventory that had accumulated was quickly scooped up and home sales rebounded.
Looking ahead at 2020, we think home sales will continue to climb, but slowly. Why?
- Although a small fraction of overall sales, new homes sales grew significantly in 2019. That has helped buoy builder confidence and lead to some of the most robust permit and starts numbers in a long time.
- If builders in 2020 deliver on their promises to build smaller and at more affordable price points, new construction will continue to be attractive to buyers unable to find a match in the competitive and limited existing home market.
- Yes, inventory is tight – but when we say that, we’re really talking about the number of homes available to buy relative to demand from buyers. Sales can remain strong while inventory remains tight – and a sudden jump in the number of sales will result in a corresponding drop in inventory.
- What really matters is the flow of homes onto the market – the turnover or velocity of home sales, not months’ supply or overall level of available inventory, that constrains home sales numbers.
- And we have reason to believe that turnover among a given segment of homeowners will be made more possible now in a way that it wasn’t before. iBuyer business models, like Zillow Offers, are ultimately about lowering sellers’ transaction costs. Economics 101 says that lowering transaction costs and making transactions themselves easier will mean those transactions will happen more often.
Texas homes that sold for $1 million or higher from November 2018 to October 2019 increased 4.4% to 5,149 sales, according to the 2019 Texas Luxury Home Sales Report released today by Texas REALTORS®. The annual report examining housing statistics for luxury homes in the Austin, Dallas-Fort Worth, Houston and San Antonio metropolitan areas also showed that total sales of million-dollar and higher homes reached $8.3 billion, a 5.1% increase from the previous year.
Cindi Bulla, 2020 chairman of Texas REALTORS®, commented, “The Texas luxury home market continues to see healthy growth. In addition to longtime residents enjoying the fruits of the Texas economy, many luxury home buyers are high net worth individuals relocating from high cost states like California, while still others are from outside the U.S. Most find they can buy dramatically more house for the same investment compared to their previous location. Add to that a business-friendly environment, no income taxes, and the finest, most friendly people in the world, and it isn’t any wonder Texas’ luxury homes have global appeal and a strong market outlook.”
From October 2018 to November 2019, luxury homes in Texas accounted for 8.2% of all sales dollar volume.
The median price for Texas luxury homes in the first 10 months of 2019 was $1,375,000, 2.0% higher than the previous year. The average price per square foot for luxury homes was $364, a 7.4% increase from the first 10 months of 2018 and more than triple the $120 average price per square foot for all residential Texas homes.
From January to October 2019, luxury homes in Texas spent an average of 87 days on the market, a decrease of eight days from the same time frame in 2018. On average, luxury homes spend more time on the market than lower-priced homes.
Bulla concluded, “The market for luxury homes is considerably different than homes at lower price points. Buyers and sellers can make mistakes when determining market value, as even a single amenity can drastically change a luxury property’s value. By working with a Texas REALTOR® who has experience in these types of properties, both buyers and sellers can ensure that they’re making a sound decision.”
About the Texas Luxury Home Sales Report
The Texas Luxury Home Sales Report is based on data from The Real Estate Center at Texas A&M University and analyzes sales data of homes priced at $1 million and higher from January through August 2016 for six Metropolitan Statistical Areas (MSAs) in Texas. Texas REALTORS® distributes insights about the Texas housing market each month, including quarterly market statistics, trends among homebuyers and sellers, condominium and townhome sales, international trends, and more.
About Texas REALTORS®
With more than 125,000 members, Texas REALTORS® is a professional membership organization that represents all aspects of real estate in Texas. We are the advocate for REALTORS® and private property rights in Texas. Visit texasrealestate.com to learn more.
The new year is here and with it comes resolutions. This year officials are asking anyone signing a legal document to make and keep a very specific resolution. ‘There will be no abbreviating the year 2020 on any important, official documents.’
What’s Wrong with Abbreviating?
Yahoo.com’s Finance page posted the following information about the issue.
A US police department has warned that abbreviating the date 2020 on legal documents could lead to fraud in an online post that has since gone viral.
When the year 2020 is abbreviated on official forms and documents, scammers could easily doctor those numbers by adding two digits to the end, leaving unsuspecting people vulnerable to fraud, the post warned.
The post shared on the police department’s Facebook (FB) page read: “When signing and dating legal documents, do not use 20 as the year 2020.
“March 3rd, 2020 being written as 3/3/20 could be modified to 3/3/2017 or 3/3/2018.
“Protect yourself. Do not abbreviate 2020.”
The original post, by George E Moore Law Office, LLC, has been shared over 58,000 times.
It is common practice when dating documents to simply use the last two numbers of the year — for example, 30/12/19 meaning 30 December 2019.
However, in 2020, this abbreviation could mean that dates could easily be manipulated by adding extra number to change the date to a previous or future year, such as 2019 or 2021.
The advice has been met with mixed responses.
One Facebook user commented: “It’s good advice … But it’s not new with this decade.
“It’s always true. If you sign 3/7/19 it could be modified to 3/7/1999 or whatever.”
However, others suggested that there was more danger in a date being altered to a more recent year or even changed to a future date.
“Changing 19 to 1999 isn’t the same as changing something from 20 to 2019 or 2021.
“I know there are a lot of ‘experts’ commenting here but there are also a lot of scammers waiting for an opportunity like this,” another Facebook user posted.
In the UK, though, no such warnings have been issued by the police nor any fraud concerns raised.
You’ve reached the breaking point. It happens the best of us at one time or another when we realize we have too much ‘stuff’. Realizing this and coming to grips with it is akin to the realization you need to loose weight. There are similarities between the two discoveries. They’re both painful! It can happen when we’re searching for a lost item. We go from a quick search to an hour later still missing it!
We realize there’s only real answer after we’ve done a whole lot of soul-searching. The blame went everywhere else to begin with, of course. It usually starts with someone moving the item because, ‘I swear to God, it was just in this drawer!’ Then it could be that you let a neighbor borrow it or maybe it broke once-upon-a-time.
It takes a while to come to the truth. It’s there, somewhere. You, however, have too many things and they’re scattered in too many places to find it.
That truth hurts. When you get to it, you’re only choice is to act.
Top 10 Tips for Downsizing
Start Small to Get Going
You know that one drawer that was teeming with junk? It’s not a hardware drawer, a file drawer or a drawer for your wires and chargers. It has all of those plus kebab skewers, flashlights, batteries, gum and even items you couldn’t possibly identify. Is it drink holder or part of the washing mashing? No one really knows.
This the drawer where that missing item is probably hiding. This chaos in this drawer is a study in irony. It’s sat there for years collecting junk and caused you endless hours of anxiety. How many times have you opened, looked for your target item, closed it, only to search it again five more times?
The irony lies in the fact that it has sat here for all these years yet would only take you about 30 minutes to organize. How many hours have you spent searching it?
Enough said. Time to take control.
Dump that drawer out on a flat surface and start to organize the contents in
Get a drawer organizer like the one seen here. This one is way less than $20 on Amazon (as of today). We like it because it has two levels so you can pack more goodies into it!
Now you’ve tackled that one drawer, move on to drawers or other places in the house. You could clean out areas like
- Your desk drawer
- One kitchen cupboard
- Shoes at the back door
- Your sock drawer
- A shelf of old textbooks
No, it’s not much, but it will feel good. Choose a space that can be completely taken care of in 15 minutes or less. It will make you feel successful and leave you wanting more.
Tip 2 – Take on a Closet
Your closet is a great place to de-clutter. Your best place to start is to pull everything out of your closet and separate the items.
Find bags, containers or boxes and label them. Labels such as ‘Keep’, ‘Donate’, ‘Relocate’ and ‘Trash.’ These will come in handy to keep everything organized while sorting.
Sort into logical categories based on your needs and goals. Whatever categories make sense to you are fine. Keep it simple and don’t overthink it. This is your chance to get into action. Sort to see how much you have of any given category. This will make decluttering go faster.
Tip 3 – Head to the Bathroom
Tip 5 – Take on a Room
This one is a larger one and will take a bit more time. Let’s say you choose the basement to take on.
You can use this method to break down a big project.
If you have an entire basement to go through, start small. Find the smallest box and go through it to get your first success.
Next, move onto a box of stuff that doesn’t have much meaning for you. Pick one that you haven’t needed to grab anything from for years. It’s probably all stuff you don’t need or care about, so you’ll gain another victory.
After that, decide what stuff will make the most difference to go through. If there is tons of sports equipment that you trip over every time you go down there, tackle that. It will make going to the basement so much more pleasant and give you motivation to keep going through everything else.
The Institute’s Luxury Market Report is your guide to an analysis on the trends and comparative data on the top-residential markets throughout Canada and the United States.
This month’s report reviews the current statistics for the luxury market. It shows a market that has remained consistent during 2019, with increasing inventory in the last few months being fairly typical and expected at this time of year.
In reviewing the major trends of 2019 the broad trend reveals that there is a significant move towards finding a more holistic approach to living. Savvy homeowners, luxury real estate professionals, developers, architects, and designers, are all reporting a significant importance on being placed on the infusion of a healthier cadence into our every day working and living environments.
Luxury is now about creating experiences that afford the feeling of luxurious well-being and the report includes four major trends that have influenced the current real estate market
- Migration to New Markets
- New Groups of Influence
- Health & Wellness
- The Natural Way – Design Impacts
In conclusion, The Institute’s analysis of these market trends and shifting buying interests shows that are lucrative real estate niches, but also still recognizes that there will always be long-term money-makers.
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. By carefully focusing on the lifestyle-specific niche your property offers, in line with trends, it can be marketed effectively to connect with the right potential buyers.
Get exclusive insights into the upper-tier real estate market at one of our live or online training sessions. Enroll today!
As the year draws to a close, November’s statistics reveal that the luxury market remains solid, prices stable, and the median length of time, as well as the selling price to list price ratios, remain consistent. Inventory is increasing but this is reflective of both the time of year and ultra-high-priced luxury properties selling at a slower rate than in previous years.
The luxury segment of real estate is often described as being a minor part of the whole industry, but is readily recognized as being a major influencer in creating trends and providing a barometer to changes for the industry. This month we are taking the opportunity to report on some of the key trends in 2019 that are responsible for creating and maintaining today’s affluent influence.
While each market certainly has its own nuances, an overall trend has become very apparent in the luxury market – it’s all about finding a more ‘holistic approach to living.’ Savvy homeowners, luxury real estate professionals, developers, architects, and designers, are all reporting a significant importance to be placed on the infusion of a healthier cadence into our everyday working and living environments.
Luxury is now about creating a comfortable experience that affords the feeling of luxurious well-being. These trends have certainly impacted real estate across North America, and it is anticipated that their influence will be far-reaching into 2020s and beyond.
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