From resettling expectations to second home mainstays and buying overseas, the annual real estate outlook highlights the global wealth influence on U.S. real estate and more
MADISON, N.J., March 13, 2023 /PRNewswire/ — Coldwell Banker Real Estate LLC, an AnywhereSM (NYSE: HOUS) brand, and the Coldwell Banker Global Luxury® program today released “The Report: 2023 Global Luxury Market Insights,” an in-depth analysis of worldwide luxury real estate market trends.
The Report reveals the most advantageous areas in the United States prime for purchasing luxury real estate, the most popular cities for secondary luxury home ownership, luxury agent perspectives on pricing trends, the influence of the global community on U.S. real estate and the trends driving luxury consumers, both domestically and internationally.
QUOTES:
“The Report sheds light on the micro-level factors that are currently impacting the state of the luxury real estate market. As we’ve seen over the past three years, the core definition of luxury has swiftly changed; ultra-high-net-worth individuals are a driving influence in the market, with this demographic leading the way in luxury home buying. With their well-diversified investment portfolios and assets, this ultra-wealthy consumer will have staying power in the real estate market today and in the years to come.”
– Liz Gehringer, president of Coldwell Banker Affiliate Business and chief operating officer, Coldwell Banker Real Estate LLC
“The intrinsic value on purchasing real estate has never been higher as wealthy buyers are fueled by lifestyle changes, and opportunity in this current market environment. While there could be more discretionary buying this year, we still anticipate a higher volume of international buyers, growing influence among younger millionaires and the continued appetite for secondary homes to be market drivers in the 2023 luxury landscape, based on our discoveries in the Report.”
– Michael Altneu, vice president, Coldwell Banker Global Luxury
Key findings featured in The Report:
The Opportunity Index
The Opportunity Index evaluates and ranks 125 U.S. markets based on buyer and seller opportunities. The Index uncovers the locations that could present the most exciting buying and selling possibilities this spring by looking at supply, demand, inventory levels and pricing, and how each of these areas favors the buyer or the seller.
The markets most likely to be the friendliest for buyers:
- Marco Island, Fla.
- Palm Beach, Fla.
- Summit County, Colo.
- Miami, Fla.
- Lake Tahoe, Nev.
The markets most likely to be the friendliest for sellers:
- St. Louis, Mo.
- Hamilton County, Ind.
- Richmond, Va.
- Johnson County, Kan.
- Raleigh-Durham, N.C.
Global Luxury Agent Market Perspective
Coldwell Banker Global Luxury Property Specialists polled in a special Agent Vision Survey remain upbeat about the current luxury outlook as wealthy consumers continue to flex their spending power, prioritizing financial stability, long-term wealth growth, family, health and wellness.
More than half of the Global Luxury Property Specialists surveyed expect 2023 luxury home prices to remain flat or up slightly from 2022. Over half anticipate demand to remain consistent throughout 2023, while nearly 30{61deb032f2f3cf43cd91e0a97f017aab274ddbb67b74a5b085bd003b9ac3cd96} believe demand could be stronger by the end of the year. Global Luxury Property Specialists transact in the top 10{61deb032f2f3cf43cd91e0a97f017aab274ddbb67b74a5b085bd003b9ac3cd96} of their respective markets.
Multiple Homes Are Mainstays for Americans in the U.S. and Abroad
The percentage of U.S.-based individuals with a net worth of $5 million or more who own two or more properties grew from 70{61deb032f2f3cf43cd91e0a97f017aab274ddbb67b74a5b085bd003b9ac3cd96} in 2021 to 79{61deb032f2f3cf43cd91e0a97f017aab274ddbb67b74a5b085bd003b9ac3cd96} in 2022, per Wealth-X. Data from Coldwell Banker’s fall 2022 Trend Report backs this claim: 72{61deb032f2f3cf43cd91e0a97f017aab274ddbb67b74a5b085bd003b9ac3cd96} of wealthy buyers noted that their future home purchase would be a second residence, vacation home or rental property.
Gen-X and millennials are leading the way with their desire to own multiple homes, seeking out hybrid properties as part-time getaways and rentals as part of their wealth building strategy. The top five U.S. metropolitan areas driving secondary-home ownership among individuals with a net worth of $5 million or more, per Wealth-X are:
- New York City
- Silicon Valley
- San Francisco
- Los Angeles
- Chicago
Wealthy U.S. individuals are not just looking domestically for properties either; the propensity to own a home abroad is on the rise thanks to the strength of the U.S. dollar and rising costs of U.S. living. According to Wealth-X, more than 64,000 overseas properties in 2022 were owned by U.S. consumers with $5 million or more in net worth, up 20{61deb032f2f3cf43cd91e0a97f017aab274ddbb67b74a5b085bd003b9ac3cd96} from 2021 and 115{61deb032f2f3cf43cd91e0a97f017aab274ddbb67b74a5b085bd003b9ac3cd96} over 2020. In Coldwell Banker’s new international survey, conducted by Censuswide, 91{61deb032f2f3cf43cd91e0a97f017aab274ddbb67b74a5b085bd003b9ac3cd96} of affluent Americans said they are most likely to own a home overseas.
Europe is a big draw for Americans, but emerging markets like Central America and Asia, particularly with younger affluent individuals, are increasingly popular locations.
Global Real Estate Influence
According to Credit Suisse, the number of global millionaires is at its highest point in history. By 2026, it is estimated that the number of millionaires worldwide will surge by 40{61deb032f2f3cf43cd91e0a97f017aab274ddbb67b74a5b085bd003b9ac3cd96}, and one in seven adults will have a net worth of at least $1 million.
Major U.S. markets and traditional centers of wealth, like New York and Los Angeles, continue to be a major draw globally for affluent international buyers. Findings from the Coldwell Banker international survey also found that affluent buyers desire to live in locations that are architecturally and culturally diverse, like Chicago, and luxurious resort towns like Aspen.
New York is still the number one city globally for high-net-worth primary residents and secondary homeowners. Cities in Asia regained position in the top global cities with primary and secondary homeowners as borders reopened, with Singapore, Beijing and Guangzhou ranking in the top 10, according to Wealth-X.
Increased desire for travel, investment opportunities, growing popularity for dual citizenship / “Golden Visas,” and favorable tax laws are major factors that are driving the global affluent population to look abroad for their next home purchase.
“The List” – What Trends Are Driving the Luxury U.S. Consumer?
Property location, home condition and amenities are the highest priorities for the affluent when looking to purchase primary and secondary residences, according to Coldwell Banker Global Luxury Property Specialists.
Global Luxury Property Specialists also find that a home with breathtaking views, quality of construction materials and privacy are the top three qualities that their clients look for when defining their dream home.
A have-it-all mentality could become a larger consideration in the high-end residential market this year as buyers flex their leverage and become more selective. Home design and style trends are also influencing factors; Global Luxury Property Specialists noted that open floor plans, bespoke architectural elements and neutral color palettes will have staying power among wealthy individuals.
Tech-friendly homes are also top-of-mind for affluent buyers, with home automation systems, energy efficient appliances and electric vehicle charging stations ranking as the top three most valuable tech amenities.
About The Report
Compiled from Coldwell Banker Global Luxury Property Specialists’ agent vision survey, data from the Institute for Luxury Home Marketing, Wealth-X, Credit Suisse and other third-party sources, The Report provides a comprehensive look at the opportunity markets for both buyers and sellers, multiple-homeownership in the U.S. and abroad and the influence of global real estate footprints. For the agent vision survey, over 600 Coldwell Banker Global Luxury Property Specialists shared their insight on the luxury market conditions, desired home preferences and values influencing high-net-worth homebuyers and sellers. From these insights also includes ‘The List,” highlighting the top trends driving the affluent consumer in 2023.
Methodology
The Coldwell Banker Global Luxury® program collaborated with the Institute for Luxury Home Marketing, Wealth-X and other third-party sources to analyze the data for the top 10{61deb032f2f3cf43cd91e0a97f017aab274ddbb67b74a5b085bd003b9ac3cd96} of 125 U.S. luxury metros. The data for this report is based on closed and recorded sides of homes sold during 2019, 2020, 2021 and 2022. The statistical information has been calculated using closed sales activity reported over a 48-month period from January 1, 2019 to December 31, 2022, as gathered from multiple sources including but not limited to various Multiple Listing Services, the Institute for Luxury Home Marketing, Coldwell Banker Real Estate, LLC, Coldwell Banker Independent Sales Associates, Brokers, Brokerages or Affiliates. Data is deemed reliable but not guaranteed for accuracy as it may not reflect all the real estate activity in the area.
The Opportunity Index: To determine the score for each type of opportunity, rankings are based on sales ratio for the last four months of 2022, sold price/list price{61deb032f2f3cf43cd91e0a97f017aab274ddbb67b74a5b085bd003b9ac3cd96} ratio (SP/LP{61deb032f2f3cf43cd91e0a97f017aab274ddbb67b74a5b085bd003b9ac3cd96}) for the last four months of 2022 and inventory growth over the last four months of 2022 compared to the first eight months of 2022.The ranking for buyer and seller opportunities provided a score where the ceiling is 100. For sellers, scores were awarded for opportunity where the market shows that it still favors the seller as demand is higher than supply, and sold prices are at or close to asking. Also analyzed was whether there had been an increase in inventory, allowing sellers to purchase a new home. For buyers, scores were awarded for opportunity where the market shows that it favors buyers with higher supply than demand and sold prices are 5{61deb032f2f3cf43cd91e0a97f017aab274ddbb67b74a5b085bd003b9ac3cd96} to 10{61deb032f2f3cf43cd91e0a97f017aab274ddbb67b74a5b085bd003b9ac3cd96} below asking. Additionally, markets were evaluated based on significant increases in inventory, giving buyers more listings to choose from. For more information, please refer to the full methodology on pages 110 -111 of The Report.
About Coldwell Banker Global Luxury®
The Coldwell Banker Global Luxury® program legacy traces its roots to 1933 and has been a world leader in luxury real estate since. Coldwell Banker Global Luxury Property Specialists are an exclusive group within the Coldwell Banker® system, making up under ten percent of independent sales associates affiliated with the brand worldwide. Coldwell Banker affiliated agents conducted 48,444 transaction sides of homes priced at $1 million or more in 2022. This equates to $288 million in daily luxury sales with an average sales price of $2.2 million in this category.* Coldwell Banker, the Coldwell Banker logo, Coldwell Banker Global Luxury and the Coldwell Banker Global Luxury logo are registered marks owned by Coldwell Banker Real Estate LLC. Each franchise is independently owned and operated.
*Data based on closed and recorded buyer and/or seller transaction sides of homes sold for $1 million or more as reported by affiliates of the U.S. Coldwell Banker franchise system for the calendar year of 2022. USD$.
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