LUXURY REAL ESTATE MAREKT AND CENSUS REPORT ON INCOME

 I have watched with amazement on how vibrant the real estate market has been in the Luxury level.  (That level being everything over $1 million.)  So when the recent issue of the September 2020 Luxury Market Report came across my desk from the Institute for Luxury Home Marketing I took it up with abandon!   In hopes that I could get some idea of why and where we are going in the Luxury Real Estate Market for myself and my clients.  As you click on the hyper link previously you will note that the entire United State has a commonality of performance, Sales price less than List price but short days on the market.  The Days on the Market indicating a "Seller's Market"!  Irrespective on a sale less than the list buyers were active to jump on price cuts to obtain the house they desired.  The first part of the Report will explain the difference between "buyer's market", "seller's market" and "balanced market".  Then comes the premise of the report,

 "One year later, and not only have we seen a major swing in demand for these larger properties (luxury homes over $1 million), but also a significant change in the preferences and lifestyle requirements of the affluent.  Covid-19 has had a major impact on everyone's lives, not just from restrictions in the way we travel, socialize and work, to where and the types of homes in which we live"

This is the Millennial Shift!  Large properties, mega mansions, private estates and luxury ranches have declined.  The demand shift was not a price shift.  It was a shift from lifestyle, inclusive communities, concierge services, wellness facilities, housekeeping and SPA facilities, and walking and proximity to nightlife.  Covid-19 has had an impact on not only our lives and potential health risks, but from restrictions in the way we travel, socialize and work, to the type of homes in which we live.

The shift is to indoor and outdoor spaces, home offices, and private wellness amenities; such as, homes with gyms, swimming pools, yoga studios and recreation rooms.

The market does indicate one most important item, the millennials are PRICE CONSCIOUS!  it also indicates that patience is in vogue and with most real estate sources the entire US is only looking at a slight increase in value.  It is the shift in market place that will see the largest increase while the previously dominant areas wl witness sight price cuts.

What you should find interesting is that the new listings versus sold has the same affect all over the US from Menlo Park to Park City Utah.  More listings, less sold with minimal days on the market.

This Report should give to those who get my newsletter food for thought.

Now the most interesting addition to this letter is a Census Bureau Report Tuesday September 15th that median income in 2019 grew a whopping 6.8%! The lock downs will erase some of these gains temporarily.  It is noteworthy in that the increase in lower-income workers and minorities benefited from faster growth and a tighter labor market before the pandemic.  This allowed many, or some, to buy their first home and to those that sold trigger a domino effect to buy a bigger better home and the the seller of such a lead up the line as the dominoes fell.  From local real estate prices that meant our market prospered so that in 2019 the U.S. median income rose by $4,379 to $68,709.  In dollar amounts this is 50% more than the Obama years when our real estate market was relatively flat.  In 2019 we saw the increase in buyers replicate the increase in earnings. Incomes among Hispanics grew by 7.1%, Blacks 7.9%, Asians 10.6%, Foreign Born workers 8.5% versus the Whites at 5.7%.  Our buyers reflected that change from Redwood City to Palo Alto to Los Altos.  Buyers were diversited by race and culture.  To the Foreign Born recently arrived whose predecessor saw a 8.5% increase, the newly arrived saw a substantial increase from his foreign experience that allowed the buyer to step up in price and location.

America grows irrespective of political party, president or media choice.  We grow because America is opportunity.  As the Stock Market came back from the March low to new highs so will we see our real estate prosper.  Be ready for change.  Look at more construction as the older homes are torn down and the newer homes will model the new choices of interior amenities.  

While I loved to watch the Packers' & 49'ers in a local bar or celebrate St Pattys with friends, those days are gone.  The 3 bedroom 2 bath house of the 50's is out.  Look for the future and ways to choose your next home.

I hope you enjoy the Luxury Report as much as I did.

Gary