Coldwell Banker Real Estate LLC, a Realogy brand, and the Coldwell Banker Global Luxury® program released “The Report: 2022 Global Luxury Market Insights,” a deep-dive analysis of emerging global luxury real estate market trends, market growth opportunities and global wealth.
Data commissioned from Wealth-X revealed that the world’s affluent population—those with a net worth of more than $5 million—grew 19.8% in 2021, adding 597,550 individuals to bring that population to 3,612,730 worldwide. This cohort’s combined wealth rose 20.4% to over $75 trillion. This marks a significant increase from 2020, which only increased by 2.1% YoY. In the U.S., wealth growth rates were even higher last year, rising 24.8% in both total population and wealth during the same period, up from 8.1% in 2020.
This significant increase in wealth, as well as the population of the wealthy and affluent individuals, combined with new and changing lifestyle patterns and dwelling preferences, led to a historic luxury real estate market expansion. In 2021, sales of single-family luxury homes, defined as the top 10% of any given market, rose 14.5% while prices increased 20.3% from 2020. Sales of attached luxury homes saw a more dramatic uptick of 29.6% year over year and a 16.6% increase in prices.
The return of the international buyer
International interest in the U.S. real estate market may reignite as foreign investors take advantage of loosened travel restrictions and high returns. Approximately 83% of Coldwell Banker Global Luxury Property Specialists surveyed anticipate the return of international buyers to the U.S. market. According to The Report, the U.S. states that attracted the greatest number of foreign homebuyers from April 2020 to March 2021 were California, Arizona, Texas, Florida and New Jersey.
Millennial buyers are rushing into homes that incorporate personal and environmental wellness into the design. The types of homes can fetch price premiums of 10% to 25%, or even higher. Concerns about natural disasters and extreme temperatures have filtered into buyer consciousness as more consumers recognize the threat of global warming. Green cities, like Portland, San Francisco and St. Paul, are attracting interest from those seeking out more eco-friendly locales.
Luxury is everywhere
More than one-third (38%) of Coldwell Banker Global Luxury Property Specialists surveyed say that most buyers came from out-of-state in 2021. As the search for more space continues, secondary cities like Denver, Boise, Sacramento, San Antonio, Raleigh and Salt Lake City prove to be popular choices. Inventory levels for luxury single-family homes dropped, ranging from 19% to 36% year over year in these six markets, affecting the number of possible sales at the end of 2021. This caused annual price increases ranging from 19.9% to 37.5%.
Urban markets are also making a comeback. For instance, Manhattan saw a 101.7% increase in luxury sales during 2021.
The Opportunity Index
The Opportunity Index, introduced for this year’s The Report, highlights 120 major U.S. luxury property markets according to their buying potential. These markets show growth potential in 2022. Coldwell Banker Global Luxury® identified the top five markets for single-family and attached homes based on the highest Opportunity Index scores:
Single-family home markets:
- Staten Island, New York
- Sussex County Coastal, Delaware
- Cincinnati, Ohio
- Charlottesville, Virginia
- Napa County, California
Attached home markets:
- Cincinnati, Ohio
- Lake Norman, North Carolina
- Marin County, California
- Greater Seattle
- Coastal Pinellas County, Florida
Rising global real estate footprint
Secondary home purchases are on the rise. Nearly three-quarters (70%) of individuals with a net worth of $5 million and up now own two or more properties, according to the findings. Coldwell Banker Global Luxury Property Specialists also reported that more affluent buyers were purchasing a getaway home—approximately 32%, up from 23% in 2020.
The five cities with the highest population of individuals with a net worth of $5 million and up in 2021 include:
- Tokyo, Japan
- Hong Kong, China
- Paris, France
- Osaka, Japan
- London, United Kingdom
When looking at real estate footprint, which considers all properties owned by individuals with a net worth of $5 million and up, other cities enter the conversation, as these locations attract wealthy individuals who have a propensity to buy both primary and secondary properties:
- London, United Kingdom
- Paris, France
- Geneva, Switzerland
- Beijing, China
“The Report sheds light on the extraordinary paradigm shift that has occurred within the luxury real estate sector since 2020. Stock market gains, rising home equity, increased savings and the cryptocurrency boom have all contributed to a massive expansion of wealth and the sheer number of affluent individuals across the globe. This—combined with a renewed focus on home for fulfilling a range of needs from security, escape, community, work and wellness—has led to unprecedented demand for bigger and better homes in new locations. As a result, luxury is no longer concentrated in a few major cities; it’s everywhere and we’ll continue to see the growth of secondary markets for years to come.”
– Michael Altneu, vice president, Coldwell Banker Global Luxury
“Double-digit wealth and affluent population gains have happened concurrently with a once-in-a-generation change in living patterns and migrations. As luxury real estate represents a larger percentage of the total housing market than ever before, it is absolutely crucial that luxury real estate professionals have a firm grasp of all factors influencing wealthy buyers and sellers today. The agent has become the affluent buyer’s connection point to new locations around the world. ”
– Liz Gehringer, president of Coldwell Banker Affiliate Business and chief operating officer, Coldwell Banker Real Estate LLC
“The Report looks beyond annual real estate statistics to offer a holistic view of global wealth and high-end property buying and selling, which is going to be crucial for agents navigating today’s evolving luxury real estate landscape. To meet the changing needs of affluent buyers and sellers, agents will need to employ a ‘surround sound’ strategy of being present in many facets of client’s life, from offering market research, extending the reach of philanthropic endeavors to creating a multi-generational partnership through family offices and wealth managers.”
– Tim Foley, executive vice president of operations, Coldwell Banker Realty
“The L.A. market is already starting to see the return of international buyers with many clients looking for second homes in beach cities such as Malibu and Santa Barbara. Buyers continue to want turnkey properties that don’t need any work. As the constraints to the supply of construction materials start to lessen, buyers will have more opportunity to purchase new construction.”
– Jade Mills, president, Jade Mills Estates and international ambassador of Coldwell Banker Global Luxury®
View the full report here: https://blog.coldwellbankerluxury.com/the-report-2022/