The changing tides of real estate With interest rates on the rise, the once bustling high-end market in Southern California has slowed. “When people were able to borrow for 2% to 3%, they were much more likely to overextend themselves in a bigger house,” Patel observed. “Now, with rates in the sixes and sevens, people … [Read more…]
Financial experts are warning that the luxury housing market is at risk of slowing down, due to higher mortgage rates that have also affected other segments of the real estate market.
This week, luxury homebuilder Toll Brothers reported that its seen a 13 percent drop in the number of signed contracts for homes in its fourth quarter, plus a 9 percent cancellation rate. Toll Brothers’ average sales price was $906,000, compared to the national average home price of just $294,000.
“In November, we saw the market soften further, which we attribute to the cumulative impact of rising interest rates and the effect on buyer sentiment of well-publicized reports of a housing slowdown,” Douglas Yearley Jr., Toll Brothers’ CEO, said in a statement.
Luxury real estate has previously looked immune to the wider housing slowdown, because buyers of these kinds of properties are generally less susceptible to the increases in mortgage rates, experts say. But Peter Boockvar, chief investment office with Bleakley Advisory Group, told CNBC that’s changing.
“We’ve been seeing a slowdown in housing all year, but this is the first time Toll Brothers really acknowledged it in a press release,” Boockvar said. “I think up to this point they’ve felt like they’re somewhat immune being on the upper end of the market where people are less sensitive to changes in mortgage rates. So that’s what really stuck out to me is the acknowledgement of something we’ve known all year that it’s now affecting their customer base.”
There’s further evidence from real estate brokerage Redfin, which said that luxury home prices increased by just 3.2 percent in the third quarter of this year, averaging $1.7 million per transaction. While that’s still positive growth, the increase is the lowest since 2016.
Redfin Chief Economist Darly Fairweather said a decline in high-growth stocks—called the FANG tech stocks—is curtailing sales. “This impacts the belief that the overall economy will grow,” he told CNBC.
In markets where homes are the most expensive, sales are weakening significantly, notably in California, according to Yearley. “California has seen the biggest decline,” he said. “Significant price appreciation over the past few years, fewer foreign buyers in certain communities, and the impact of rising interest rates all contributed to this slowdown.”
The luxury real estate horizon looks bright for a few counties in Florida despite a slowing sales forecast for the state overall. Interest from prospective home buyers from America’s Northeast is aimed at both Collier and Sarasota, two of the nation’s fastest-growing luxury housing price markets. These areas, along with interest in Jacksonville and a new projects across the state, are bright spots in a sagging Florida luxury market.
According to the May 2018 Luxury Home Index from realtor.com®,
interest from buyers in New York, Boston, and Chicago boosted Sarasota (North
Port) and Collier (East Naples) price growth of 19 and 14 percent respectively.
In that report, even Fort Lauderdale, which ranked 19th on the national list,
showed a 9% uptick in sales prices. Javier Vivas, director of economic research
for realtor.com® offered this comment in a press release:
“Luxury prices in the Sunshine State are rising quickly as buyers from places like New York, Boston, and Chicago get wind that there is a better bang for their buck available down South. Meanwhile, we are seeing signs of a luxury market glut in many established markets, which is in some cases leading to spillover demand for their less pricey neighbors.”
Luxury properties in the news in Sarasota have helped peak interest in the area. An instance that comes to mind was the recent announcement that the one of America’s most talked about restaurants, the Beach Bistro opening at the luxurious BLVD Sarasota (feature image) beginning of 2020 put an exclamation point on one of the city’s most exciting new developments. Remaining BLVD residences range from 3,550 to 5,500 square feet and are listed starting at $1.9 million.
The boost to Collier County sales prices was helped by big home sales in Naples where one
sale came in at a record $48.8 million. Naples’ 34102 ZIP code ranked is the
15th richest in America according to a recent report by Bloomberg. The recent
sale of a Port Royal beachfront mansion of 9,394 square feet that originally
listed for $60.9 million dollars, obviously did nothing to lower the areas
Amazing new luxury developments dot the state and draw attention from high net worth investors, even as the market trends toward oversupply. One that comes to mind is the Waterfall Condominiums going up at Jax Beach. This eight-floor complex of 42 residences will have two fantastic penthouses on the top level, and range in size from 2,721 to 3,077 square feet. Expansive terraces will offer unmatched beach views listed by the Hanley Home Team at about $1.3 million on average.
An interesting aspect for these luxury residences is the fact new height restrictions have now limited beachside properties to no more than three stories tall. But, the beach property on which the condos will be built, at 14th Avenue South and 1st Street South, was grandfathered in, allowing for a high-rise residential structure. This brings up another important variable for all Florida luxury properties. Once the growth in new development sinks (and this is inevitable), the exclusivity of these properties will rise accordingly. Short story, prices will probably skyrocket.
Finally, “one of” luxury properties all across the Sunshine State help prop up high-end property prices. An example here is the so-called “Victory House” (above) that sits on 200 fabulous bayfront acres overlooking St. Petersburg and downtown Tampa Bay. This amazing property has its own private beach and has hurricane-proof doors and windows throughout. The six-bedroom, six-bath house is on a 13-acre parcel that includes about seven acres of uplands and the canals, a place where the owner will never have neighbors. Listed at $18 million, the mansion named for Nasr “Vic” Abuoleim is but one example of hundreds of similarly “exclusive” properties in the state.
A wonderful friend
of my father’s who was a land developer, he had this saying that has never
failed me. “Always buy land, they don’t
make any more of it,” he’d say. In
the case of Florida property, the more expansive the market gets, the more
“land” becomes a luxury. My bet is on prices rising in the mid-term to long.
The U.S. housing market is on fire. Prices are rising at a record pace, and it’s getting harder and harder to find a good deal on a home. Even the ever-increasing cost of home lending isn’t doing much to drive prices downward, despite the US Federal Reserve’s best efforts to curb inflation by raising the base rate! If you’re looking for a luxury home, there are still a few markets where you can find some good deals. Here are five of the strongest luxury housing markets in the U.S. right now.
St. Louis, Missouri
St. Louis is a city that has been on the upswing in recent years. The economy is strong, unemployment is low, and there’s a lot of new development happening. This has all led to a surge in demand for luxury homes in St. Louis. The median home price in St. Louis is currently around $250,000. This is significantly lower than the national average of $375,000. So if you’re looking for a luxury home in a more affordable market, St. Louis is a great option.
While the Midwest region might not be for everyone, St. Louis has a lot to offer luxury buyers in terms of amenities. The city is home to a world-class art museum, a symphony orchestra, and a number of professional sports teams. St. Louis is also located within a short drive of some of the most beautiful natural scenery in the country.
Boulder is a city that is known for its stunning scenery, its vibrant arts and culture scene, and its strong economy. The city is also home to a number of Fortune 500 companies, which has helped to drive up demand for luxury homes in recent years.
The median home price in Boulder is currently around $900,000. This is significantly higher than the national average, but it is still relatively affordable for luxury buyers. Boulder is a popular destination for tech workers and entrepreneurs, and the city’s economy is expected to continue to grow in the coming years.
San Jose, California
San Jose is the heart of Silicon Valley, and it is one of the most expensive cities in the country. The median home price in San Jose is currently around $1.5 million. However, the city’s strong economy and its abundance of amenities make it a desirable place to live for luxury buyers.
San Jose is home to a number of Fortune 500 companies, and the city’s unemployment rate is consistently below the national average. The city also has a thriving arts and culture scene, and it is home to some of the best restaurants in the country. Plus, its close proximity to San Francisco means it’s close to even more incredible culture and arts.
Dallas is a major financial and business center, and it is home to a number of Fortune 500 companies – much like many of the other entries on this list. Similar to San Jose, for example, the city’s economy is likewise quite strong, and the unemployment rate is consistently below the national average. In fact, the entire Dallas-Fort Worth area has been a solid economic performer for decades.
The median home price in Dallas is currently around $500,000. This is significantly lower than the median home price in San Jose or Boulder, but it is still a relatively high price tag. However, Dallas offers a number of amenities that appeal to luxury buyers. The city has a vibrant arts and culture scene, and it is home to some of the best restaurants in Texas.
Hilton Head, South Carolina
Hilton Head is a resort town located on the Atlantic coast of South Carolina. The city is known for its beautiful beaches, its golf courses, and its upscale shopping. It has a very strong and well-earned reputation for luxury living thanks to its position on the coast and the warm weather it experiences nearly year-round.
The median home price in Hilton Head is currently around $1 million. This is a relatively high price tag, but it is still affordable for luxury buyers. The city’s strong economy and its abundance of amenities make it a desirable place to live for those who want to enjoy a luxurious lifestyle. It’s especially relevant for anyone who enjoys boating or watersports of every kind.
These are just a few of the strongest luxury housing markets in the U.S. right now. If you are looking for a place to buy a luxury home, these are the cities where you should start your search.
Bonus Markets You Should Consider for Luxury Housing
St. Louis, Boulder, San Jose, Texas, and Hilton Head are fantastic choices if you’re looking for a solid luxury housing market. In addition to the five cities listed above, there are a few other markets that are worth considering if you’re looking for a luxury home. These include:
- Austin, Texas
- Nashville, Tennessee
- Raleigh, North Carolina
- Charlotte, North Carolina
- Phoenix, Arizona
These markets are all experiencing strong growth, and they offer a good mix of affordability and amenities. So if you’re not sure where to start your search for a luxury home, these are a few great places to consider.
The Last Word on Luxury Home Markets in 2023
If you are in the market for a luxury home this year, you can’t go wrong with any of the excellent cities and neighborhoods mentioned in this list. However, you should be aware that markets change all the time based on economic conditions. Be sure to do your due diligence and thoroughly research every property you’re interested in. Enlist the help of a qualified real estate professional familiar with your target market for the best results!