The luxury housing market in the first quarter of 2023 is currently in the midst of an ongoing re-alignment from its overheated state of the last two years, yet it remains resilient as high-net-worth consumers continue to view real estate as a sound investment.
This is all despite gyrations in financial institutions and global governments, as well as—to a lesser degree—the impact of higher residential real estate mortgage interest rates.
City slicker
Thus far in 2023, the dominant theme has been a tremendous lack of inventory as demand continues to outstretch supply. Days on market have also increased—a trend that began to unfold in the latter half of 2022.
And while there have been concerns about values depreciating, many members, primarily in the southern United States, have noted an uptick in prices and overall home values. This holds particularly true in states such as Florida, Texas, Tennessee, North Carolina, South Carolina, and Georgia.
Other members spread across the U.S. have reported a bounce-back in cities. For instance, sales are increasing in markets such as Seattle, New York City and Boston, as well as Miami.
Quality of life has certainly been a major focus for consumers as they look for walkable access to top amenities and services, including recreational venues, entertainment and nightlife, and healthcare centers.
Consumers who sold their homes to move to the suburbs during the pandemic are now heading back to cities in droves, especially as some corporations ask employees to return to the office for most of the week, typically Tuesday through Thursday.
In terms of markets to watch, Miami is literally the hottest city in the U.S. right now, but it has become a victim of its own success. It is an area that is now highly unaffordable for the same employees who are in the service of high-net-worth individuals.
How Miami addresses its affordable housing challenges will continue to be a trend to watch in the time ahead.
Meantime, the State of Florida continues to do its best to attract corporations, which are migrating to the Sunshine State for its favorable tax climate.
Country buoy
Globally, Portugal is one of the hottest markets in Europe right now as professionals continue to move there for work. It is a similar trend in Spain, where younger families and retirees continue to relocate.
Another hot market is Dubai in the United Arab Emirates, with its soaring skyscrapers, Michelin-starred restaurants and luxury shopping. As this market looks to diversify economically beyond oil, it is quickly becoming “Miami on steroids”—a place where new money is looking for a place to call home. To top it all, Dubai’s status as a tax-favorable haven is a major draw for Europeans and professionals from Asia, including India.
Singapore continues to get the overflow from corporations and executives relocating from Hong Kong as China puts the squeeze on its special administrative region.
The most sought-after destinations worldwide for second homes include France, Greece and Italy, as well as Spain. We also foresee London heating up as Chinese investors continue to show more interest in that market.
Eyeing tech
One additional trend that continues to be top-of-mind as we continue into 2023 is artificial intelligence (AI). Brokerages have adopted this technology tenfold.
Almost overnight, AI usage has exploded, becoming a go-to for agents in every facet of their businesses, from creating listing descriptions and social media posts to data mining.
At Luxury Portfolio, we foresee the use of AI becoming a permanent force in the residential real estate marketing toolkit. This is not just a gold rush towards a shiny object—it will be a mainstay of our business. To what extent remains to be seen, but it is not going away anytime soon.
Finally, a cornerstone of the global luxury residential real estate market, the international buyer, continues to reemerge as the impact from the COVID-19 pandemic subsides.
With most countries now open, Luxury Portfolio International members are reporting significantly higher engagement in cities throughout the Americas and Europe. This is extremely positive news and another reason why city centers—also of great interest to this group of prime property buyers—are experiencing such growth.
Mickey Alam Khan is the New York-based president of Luxury Portfolio International, a leading global network of independently-run luxury real estate brokerages.
For more information, visit https://www.luxuryportfolio.com/.
