Where luxury home sales are plummeting

Plus, 10 affordable outdoor-friendly cities

Grace Townsley
June 14, 2022

Why we love real estate 

There’s been so much volatility in the market lately. Every headline seems to be about the bear market, the latest crypto drop, and how many millions of dollars investors are losing every day. It can feel really overwhelming. But this volatility is actually why we continue to believe that real estate is the safest place you can invest your money.

Real estate really is a safe haven. While crypto isn’t looking great, and stocks are tanking, real estate is holding steady. From our perspective, real estate is going to outperform any other asset on the market because a) you can live in it while you own it b) it can provide consistent income if you rent it out and c) it gains value over time. 

When we advise our clients to buy real estate, we enable them to buy into the best asset available. We’re helping them achieve financial stability, build wealth, and create a legacy. That makes us so proud of the work we do— the work YOU do— to serve each and every one of our clients. 

- James and David

Where luxury home sales are dropping fast

Source: Unsplash

Between stock market uncertainty, global volatility, and rising interest rates, many homeowners are rushing to list their luxury properties while the market is still hot. But buyers aren’t exactly storming the doors. Homes priced at the top 5% of the market are beginning to sit longer, and the luxury market is facing its first summer-slowdown in two years. Check out these stats:

  • From February to April, sales of luxury homes tumbled 18% YoY, the biggest drop since the beginning of the pandemic
  • Luxury sales in Nassau County, NY fell a staggering 43.5% in that same period, followed by Oakland (35.1%), Dallas (33.9%), and Austin (33%)
  • While prices on luxury homes aren’t yet dropping, price growth has slowed. Prices only increased 19.8% between February and April, down from 27.5% over the same period last year.

Our take

You can let statistics about a market decline get you down, or you can see the opportunity in every number. To us, rising rates and falling sales mean we can create urgency with our buyers. We can show them that houses will continue to get more expensive, and there’s a wave of inventory hitting the market right now. That urgency creates action. If we want to light a fire under our sellers, we’ll urge them to sell now while they can still get top dollar and attract a large pool of interested buyers. When you use today’s news to create healthy urgency, you’ll never run short on opportunities. 

Nothing like the smell of fresh air and affordability

Source: Unsplash

If you’ve been craving the great outdoors, you’re not alone. In 2021, a record-setting 53% of people participated in outdoor activities. It’s no wonder this trend is spilling over into the housing market! Realtor.com compiled a handy list of affordable cities for nature lovers using price data, bike-friendliness ratings, and the number of local outdoor-related businesses. As a bonus, each of these 10 cities are within a half-day’s drive of a national park!

  1. Urbana, IL
  2. Madison, WI
  3. Iowa City, IA
  4. Bloomington, IN
  5. El Paso, TX
  6. Columbia, MO
  7. State College, PA
  8. Morgantown, WV
  9. Rochester, NY
  10. Duluth, MN

Our take

The pandemic has shifted the typical wants and needs of buyers. They don’t want to be cooped up inside anymore. They’re searching for areas where they can work out, where the kids can play, and where they can comfortably work from home. We’re seeing that buyers will compromise on a lot of wish list items just to have a big backyard, and we’re sure that’s why many of them will be heading to those cities above. 

Rising prices also hit mobile home market

Source: Forbes

Another effect of the pandemic: the rising costs of mobile homes, which account for roughly 6% of residences in the United States. The average price for those homes has gone up nearly 50% in the past couple years, rising from $82,900 to $123,200. Also, many owners pay monthly rent for the land, and in some parts of the country, that rent has doubled or tripled in recent months.

Two main factors behind this spike: 1) Corporate park owners and institutional investors buying up privately-owned parks and pushing up lot rental rates and 2) Surging demand for mobile homes due to the high housing prices and low supply.

Our take

These numbers show that, across the board, the price of real estate is increasing. It’s not just single-family homes—it’s condos, multi-family units, manufactured homes, mobile homes, and everything in between.

Schematics 

The news that just missed the cut

Source: Builders Magazine

Foundation Plans

Advice from James and David to win the day

With home prices and closing costs on the rise, the last thing your client needs is yet another unexpected expense. But if they’re buying into a community with an HOA, surprise “special assessments” can absolutely break the bank. Here’s what you need to know about these not-so-special fees:

  • Special assessments cover major one-off projects. Your clients’ typical monthly HOA dues are meant to cover normal maintenance and upkeep, but special assessments are levied to pay for bigger projects that require more money than the HOA has saved. These projects can include installing new elevators, replacing the roof, or repairing storm damage.
  • Sometimes sellers will pay off the special assessment‚ but not always. If the sellers are still paying off their special assessment, they’ll typically use their equity to finish those payments. But in today’s market, they may expect your buyer to cover this cost along with the purchase price. 
  • If you don’t ask, you probably won’t know. Sellers aren’t always (...ahem) forthcoming about these fees. Always make a point to ask if any special assessments are on the horizon and how many have been levied in the past.
  • Be wary of older, outdated buildings. Siding, windows, and roofs are the most common special assessment projects. If your client is considering a property that hasn’t been updated in a decade or more, warn them of these potential major repairs.

Just in Case

Keep the latest industry data in your back pocket with today’s mortgage rates:

Source: Rocket Mortgage

Today’s stories may have you feeling uneasy about the future of real estate. But let us assure you, a market cooldown is completely normal and necessary, and absolutely not a career-breaker. If you keep doing what you’re doing and continually offer value to your clients, you can sail the ups and downs of this industry like a pro. Don’t be worried, and do keep giving it your best.

- James and David

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