October’s Luxury Market Report reviews the current statistics for the luxury market in North America month over month, as well as the 13-month trend. The main question reviewed this month: “Where is the luxury real estate market headed?”
Media hype, expert opinions, and contradictions within the market itself have been causing confusion and creating a lot of uncertainty.
Is it still a seller’s market despite the analysis showing that at least 65% of single-family home markets and 80% attached property markets’ data proves that, as of the end of September, the overall luxury real estate market is still favorable to sellers? Or does diving a little deeper into the data show a different story and a definite transition toward a balanced or even a buyer’s market?
We investigate some of the parameters indicating that there is a downward trajectory, as well as those that might halt or reverse this trend. We evaluate how buyers and sellers themselves, as well as their purchases over the last two years, are having a significant influence on the current market.
It is important to understand that the art of selling and buying should always include an analytical approach to truly appreciate the realities, rather than just listening to the market rhetoric.
It is hard to picture that less than 12 months ago, the luxury real estate market was on a strong upward trajectory, consistently seeing demand increase, prices soar, and inventory levels fall.
Even though we realized that this trend could not continue infinitely, the speed at which the market appeared to turn in May 2022 seemed almost as dramatic as the upswing in May 202 at the start of the pandemic.
Although the tables changed earlier this summer, with the number of homes listed for sale climbing for the first site since the start of the pandemic, there was still a feeling that while there would be a transition, it would be more gradual, eventually settling into a traditionally paced market.
Instead, what we saw over the last few months was turmoil of differing opinions about the current status, media hype of doom and gloom, and expert contradictions about the future of the luxury real estate market.
The simple truth is that both the economy and the real estate market are in a state of unpredictable flux when even traditional methods, such as raising interest rates, are not achieving the desired results as inflation increases. In September, U.S. inflation rose to 6.6% in Canada, it is currently 7%,
In some locations, we see the severe impact of this increase in interest rates on the number of sales, whereas, in others, the lack of inventory is still playing heavily in the seller’s favor. Some buyers are feeling the affordability squeeze because of the additional increase in the cost of borrowing. Yet, with very few sellers needing to put their homes on the market, inventory levels remain historically low, leaving even cash buyers without the negotiating power typically expected in a transitioning market.
The reality is the factors of how buyers and sellers are reacting combined with influences from outside the industry are creating conflicting messages that are resulting in strange times throughout the real estate market.
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