The 2021 luxury real estate market will be recognized as one of the strongest years for luxury home sales. Driven by high demand and falling inventory levels, prices and sales outpaced an already strong year in 2020. The Institute analyzes important insights from 2021 and previews significant trends forecasted to impact the upper tier of the real estate market in the United States and Canada in 2022.
- The number of sales increased by 19% for single-family homes with an aggregate sold price growth of 17% compared to 2020.
- The attached property market’s sales increased by 34% and the aggregate sold price grew by 10%, compared to 2020.
- A significant trend in 2021, predicted to also impact 2022, is the continuous monthly decline of new inventory entering the market.
- Some markets saw inventory levels drop by as much as 55% compared to 2020.
- Declining inventory levels have been driven by the insatiable demand of the affluent for luxury properties across North America.
- At the end of 2021, The Institute identified that 24% of the markets reviewed in their report had experienced a drop in number of homes sold compared to 2020, due to a significant lack of desirable property available for purchase.
- Resorts and smaller markets were the greatest impacted. However, attractively priced larger markets felt the brunt of this lack of inventory too.
The “COVID-19 Effect,” as coined by The Institute, details the timeline of the last two years; recognizing the main events, changes in buying patterns and evaluation of priorities.
Major Trends In 2022:
- The strength of 2021’s luxury real estate market is expected to provide a platform of stability for continued growth and opportunity during 2022.
- Inventory constraints will keep demand high and prevent price decreases.
- The affluent, having reconciled their new priorities, will look to consolidate these into longer-term homeownership decisions.
- The luxury real estate market will also benefit from the following trends:
- Migration to more affordable secondary markets for business purposes, which facilitates the opportunity to purchase a more luxurious property.
- Relocation to other markets to enhance lifestyle choices created by the ability to work from home.
- New wealth entering the market as the growth of high-net-worth individuals has increased exponentially over the last two years.
- Inventory levels should increase as more people are ready to move or need to sell to be cash ready for their next purchase.
- The creation of financial choices to diversify their asset portfolios into real estate.
- Environmental sustainability will play an increasingly important role in people’s choices.
In reviewing the data, I am excited to see the return of core values in the affluent’s decision-making process and considerations for their luxury home purchases. The overall need to focus on family, health, lifestyle and well-being have simultaneously positioned the luxury real estate industry to be at the forefront of the implementation of sustainable environmental practices and procedures.
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Diane Hartley is the president of the Institute for Luxury Home Marketing, a premier independent authority in training and designation for real estate agents working in the upper-tier 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.