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2021 Outlook: Luxury Market Report

Susana Murphy

Susana Murphy began her career in real estate in 2005 after owning marketing and recruiting firms...

Susana Murphy began her career in real estate in 2005 after owning marketing and recruiting firms...

Mar 4 5 minutes read

There is no doubt that 2020 was the year of unpredictability, from dramatic stops and starts to multiple offers on properties that had sat on the market for years, as well as significant lifestyle changes in both work and home life.  It is expected that the affluent will continue to realign their priorities to spend more on real estate to provide their families a sense of security, health safety, and privacy. For the wealthy this will mean that work, school, socializing, and entertainment will take place in their homes through much of 2021. 

Prices for luxury properties have climbed steadily over the last few months in the majority of luxury markets across North America, even in major metropolitan cities.  

Much of this demand has stemmed from the growth of the wealthy, both in terms of financial and numbers, during 2020. They have been responsible for an upsurge in property purchases in exurban and rural communities, as well as larger attached properties in metropolitan markets.  Many experts believe that, if COVID starts to dissipate or becomes more controllable during 2021, there will be a return to the big city life, as some will miss the cultural and social aspects, and others will recognize that it is a necessary step to advance their careers or businesses.

Other experts believe that the demand for exclusive residential properties that offer larger footprints, provide more amenities such as private outdoor space,  numerous home offices, and health perks including air and water filtration to natural and ambient lighting systems, will still be the driving force of luxury real estate in 2021. Stating that the trends of 2020 have created a complete shift in lifestyle choices that is unlikely to be reversed. Factor in lower interest rates, low inventory levels, new wealth from sectors that benefitted from the pandemic, a millennial population that is ready to find a safe haven, and significant increase in second home buying as well as upsizing and new properties offering higher wellness standards, and you have the perfect storm for creating a continued strong buyer demand. 

The bigger question lies in whether current sales levels and price increases can be sustained indefinitely. There is always a point at which prices do become too high and demand levels off, but for communities where inventory levels are at an all-time low, this trend may well continue far into 2021. In fact, many luxury markets saw a significant decrease in inventory in January 2021. Single family available properties are down over 30% from January 2020.

Key Trends Continuing into 2021...

Returning to Rural:

With lifestyles continuing to shift, many affluent buyers have or are looking to remove themselves and their families from the overcrowded lifestyles of urban life.  Suburbs that were once inconvenient and not close enough to major cities are no longer out of the question.  Due to remote and hybrid working flexibility, long distance commutes into city centers will no longer be an issue.

Purchasing Sight-Unseen:

Technology has truly shown it's value throughout the COVID-19 pandemic and it still continues to do so.  Video conferencing, FaceTime and high-quality property videos have allowed real estate brokerages and prospective buyers to connect and tour homes without ever setting foot inside.  This has been a game changer for real estate as many buyers now have better opportunity for securing the homes and lifestyles they're seeking without having to travel to each individual site.

Private Amenities - a MUST!:

With the overall shut down of social clubs and recreational clubs, the wealthy have taken additional consideration in the amenities that they want for their families.  Many of these have included large yards, in-ground pools, and outdoor recreation and living areas. Staying home is the new normal and therefore the benefits of having these extra amenities are invaluable.

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Affluent consumers will continue to realign their priorities to spend more on real estate that gives them and their families a sense of security, health safety and privacy in a cocoon all of their own.

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Sources: Luxury Home Marketing & Luxury Daily

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