A luxury real estate broker shares his view of the market, what he sees in his woodland neck, and how he is changing his focus to attract more sellers.
Luxury homes show a steady level of sales, as well-to-do, mostly urban consumers who can now work remotely have decided to either move or find new single-family homes in the suburbs and holiday villages.
They are looking for homes that offer live jobs, gyms, large kitchens and outdoor play and recreational areas with recreational opportunities right outside the front door.
In addition to the lifestyle benefits, they see these investments as diversifying their financial portfolios with a frothy stock market. They also take advantage of the opportunity to move from states with high income tax to states with lower levels of taxation, which results in significant income tax savings.
While they buy cash, they can use their dollars at current historically low interest rates, then get mortgages on their homes to free up money for other investments.
As a luxury home owner, it is difficult to turn a blind eye to the sale right now; it creates some kind of inventory on this end of the spectrum.
In accordance with RedfinWe are seeing a rise in new listings in the US compared to the previous month from December 2020. building Material costs have prompted more builders to focus on this segment as it has reserves to cover these costs while the available market does not.
The COVID economy has not affected luxury home consumers, usually highly skilled workers, as much as it has for mid-to-low-end consumers. Consequently, their purchasing power remains high – and they can make offers for cash.
The spike in home prices due to low inventory levels in the rest of the spectrum has hurt consumers at affordable and mid-range prices. Despite the low interest rates, there are valuation gaps that require buyers to have more cash than the required down payment, often making them ineligible for loans.
Then there is the problem rival against cash buyers, many of whom are investors, further limiting the ability of other buyers to purchase mortgage-financed homes. Finally, due to income disruptions, layoffs, etc. Over the past 12 months, obtaining a loan is still a challenge.
Let’s see if First Home Buyer Act has the meaning. Unfortunately, the increase in mortgage rates is likely to negate the benefits for new buyers who have not yet entered the market.
In Jackson Hole, Wyoming, where I live, we have experienced phenomenal demand over the past year as a result of our focus on outdoor lifestyles, open spaces and a favorable tax climate.
It happened in two waves. First, in the segment of luxury one-family homebuyers, which consisted of COVID refugees fleeing cities subject to onerous state and local taxes.
The second wave included younger virtual workers, many in technology or finance, who were freed up by employers to work anywhere. They have the income to participate in our luxury housing market, where apartments start at $ 700,000 and single-family homes have recently started at $ 2 million or more.
Wyoming is ranked # 1 for most tax-friendly state in the country. This incentive, combined with the mountain lifestyle, makes it a desirable destination for new co-primary housing and tax residencies.
However, there is a nationwide housing shortage that will take years, if not more, to balance demand. This will continue to support the market and ensure the stabilization of current house prices.
For many, the recent spike in home prices does not correlate with an increase in income. The expected rise in mortgage rates will negatively affect first-time and medium-market buyers, reducing their purchasing power.
If the Biden administration receives the proposed increase capital gains tax up to 43 percent, this will further reduce stocks of luxury homes as sellers may choose to wait for a better time to sell in the future and buyers may not want to cash out their stock to diversify into real estate.
If the capital gains tax rises sharply, the continued stock shortage continues, coupled with the loss of purchasing power due to higher mortgage rates and the mismatch between home values and incomes, I could see some stagnation at all levels of the market. Both buyers and sellers can stick to a waiting pattern until market conditions improve.
While we’re still in the seller’s market, I’ve changed all of my marketing to focus on home sellers, showcasing my history and success by showing how to introduce a new listing to a market that is most likely to see competing offers.
There is a bit of art in this to ensure both maximum profit for your salesperson and minimum responsibility as you manage everyone’s expectations. I would encourage agents to create case studies for inclusion in listing presentations; it is a great way to gain the seller’s trust and demonstrate your capabilities.