What were the driving forces behind the luxury real estate market in 2020. A new report by Coldwell Banker titled “The Report: 2021 Global Luxury Market Insights” details the top performing and emerging markets, along with shifting buyer trends during an unprecedented year.
New definitions of luxury — like the intangibles of family, health, space and security — spurred new affluent living trends in 2020 as buyers realigned priorities by seeking out properties with access to the outdoors, privacy and more space.
Demand for mega mansions, estates and other luxury compounds surged, with 55% of Luxury Property Specialists
surveyed noted that more square footage was the number one amenity that flipped in demand from 2019 to 2020. A
new affluent demographic, known as Trailblazers, drove shifting buying trends as they migrated away from cities in favor of small, hidden gem towns, the suburbs, and second home destinations.
As wealthy home buyers embraced new lifestyles, new trends prevailed. The top preferences expected to have staying power over the next 5 years include: the home office (27.5%), demand for a second home (22.5%), and the desire for single-family detached homes (22.5%).
“2020 was a transformative for the luxury real estate market – we saw record-low interest rates paired with demand at an all-time high for single-family homes, resulting in extremely low inventory levels and multiple bidding wars across several luxury markets. The emergence of a new affluent demographic and type of home buyer fueled this growth driven by shifting lifestyle preferences. Many of the trends we saw at the forefront in 2020 will continue to evolve in the years to come.” – Jade Mills, president, Jade Mills Estates and International Ambassador of Coldwell Banker Global Luxury.
In 2020, there was a dramatic change in many luxury markets that had been buyer’s or balanced markets in 2019.
Escalating demand now pushed these markets into seller market territory, which is only anticipated to continue into
2021. To determine the Top 10 “Power Markets” of 2020, the Coldwell Banker brand collaborated with The Institute for Luxury Home Marketing to analyze the markets with at least an average of 50 sales per month and the highest sales ratio percentages. On reviewing the Top 10, four new hotspots came into focus for a variety of reasons:
East Bay, California: Both single family and attached-home sales soared due to high demand as buyers’ concerns shifted from reducing daily commutes to gaining space. Inventory could not keep up, as most listings prompted multiple offers and drove up prices. This resulted in the sales ratio rising over 100% after July.
Colorado Springs, Colorado: Growth in this city expanded faster than predicted fueled by millennial and out-of-state buyers. The sales ratio (38.84%) remained consistent with luxury single family homes in high demand.
Fairfax County, Virginia: Luxury townhome sales saw unprecedented levels; there was only a month of inventory for $645,000+ townhomes in December, and even less for those in the $1M+ category, with a 51.93% sales ratio for attached homes.
King County, Washington: Pent-up buyer demand, driven by historically low interest rates, desire for more space, and lower-than-expected inventory levels, contributed to record low days on market and a 37.7% sales ratio at asking price.
“The Report” also identified four key categories of emerging markets across the luxury home sector offering a range of lifestyle amenities, cultural experiences, and educational opportunities. The unexpected rise of these locations
underscores the unforeseen dynamics at play during 2020 as the pandemic impacted many buyers’ decisions.
Secondary Markets on the Rise:
- Phoenix, Arizona;
- Denver, Colorado;
- Dallas, Texas.
Markets Exceeding Expectations:
- Salt Lake City, Utah;
- Sacramento, California;
- St. Louis, Missouri.
- Burlington, Vermont;
- Reno, Nevada;
- Coeur D’Alene, Idaho;
Ready for Discovery:
- San Antonio, Texas;
- Knoxville, Tennessee;
- Hamilton County, Indiana.