The message of a changing or transitioning market this year is echoed by many experts with varying degrees of positivity and negativity. But let’s be clear: being successful in any profession requires a mixture of knowledge, skill and perception, as well as the ability to judge when there’s an opportunity—and leverage it.
Those who recognize and seize the opportunity in this transitioning market will cement their dominance in either becoming or remaining successful real estate professionals.
There are three uniquely insightful perspectives to inspire those ready to navigate through these choppy waters.
Before proceeding, it should be clarified that when I refer to the luxury market, this covers a much wider segment than the highly publicized multimillion-dollar sale. The reality is that entry level into the luxury arena, for a substantial part of North America, starts at $500,000.
Growth Through Luxury
In 2008, the luxury market led real estate out of recession, with demand and price points escalating at almost dizzying speeds. Today, the luxury real estate market has seen the most significant impact of the slowing demand.
However, globally, there are more high-net worth individuals (net assets of $1-$30 million) than ever before. In 2018, there was nearly a 2 percent growth, with more than 22 million individuals with a combined net worth of $61 trillion, as per Wealth-X.
This disparity of growing wealth and the perception of a slowing real estate market lies in the difference of their spend on property types, locations and requirements.
The biggest challenge for real estate professionals is the need to be prepared, in advance, of what the “next” and the “new” will be from the affluent purchaser.
Luxury Buyers Hold the Solution
All statistical analysis and subsequent reports indicate that there’s an ongoing increase in the level of luxury inventory available. For many real estate professionals, this signals difficulties for their sellers and more favorable terms for potential buyers.
Savvy real estate professionals should look to past buyers who weren’t able to close on the purchase of a luxury property during the fast-paced, multiple-offer years. While some of these buyers may have found solutions, many decided to remain in their current properties and may not be aware that they now have the opportunity to step into their desired property type.
While it’s important to recognize that these types of opportunities exist during transitioning markets, it’s also critical for an agent to learn how to leverage them effectively.
When it comes to real estate, it’s the transition of who is generating and holding the wealth that’s changing at a rapid pace. While the Americas still lead both the number of high-net worth individuals and their total combined net worth, Wealth-X predicts that the most significant growth will be in the Asia-Pacific region over the next five years.
But diversity is more than just location. There are significant changes in wealth within age groups, gender, ownership of wealth and inherited vs. self-made wealth. It’s also important to understand what the “luxury” requirements are for each of these groups.
Diversity in the development, building, purchase, redesign and renovation of real estate has become the new barometer by which real estate professionals should recognize that the needs of homeowners are very different from five or 10 years ago.
As historical trends show, real estate will continue to be driven by the diversity of demand from the high-net worth, because they not only impact the type of luxury purchase, but also create demand that will filter down through other market segments.
Diane Hartley is president of The Institute for Luxury Home Marketing, an independent authority in training and designation for real estate agents working in the luxury residential market. Hartley brings her passion for luxury marketing and more than 20 years of experience growing and leading businesses to her role as president of The Institute. For more information, please visit www.luxuryhomemarketing.com.