May 2023 Luxury Real Estate Report: Key Insights for Success in the US Market
At RE Luxe Leaders, we love diving into the numbers to uncover trends that can help you make informed decisions for your business. There has clearly been two markets vs one national trend line. One has been sliding and the other gaining. This has been fueled by wealth migration over the past year. The power centers of the US luxury market are shifting in real time.
Rebounding from February's Trough: Positive Signs of Growth
After a bit of a slump in February, we're thrilled to report that the real estate market is starting to rebound. In the year-over-year comparison, we're seeing promising results. The top end of the national market has gone up by 1.07%, with an average price of $506,609. The Executive Class Luxe is performing at 0.85% year over year, while the Luxe Class (properties priced at $2 million+) is showing a growth rate of 0.37%. And for those uber-luxurious properties priced over $5 million, we're seeing a modest performance with a growth rate of 1.33%. Again, these skew significantly from area to area.
Inventory Lagging Behind: A Supply Issue to Consider
While the market shows signs of improvement, inventory is still lagging behind. In most areas, we're observing a significant decrease in inventory compared to 2019 levels. This supply issue becomes even more pronounced as the seasonal bump in demand starts to climb. Additionally, we've noticed price depreciation in specific areas, primarily concentrated in California. Notably, Los Angeles is expected to experience a downward spike due to the implementation of a transfer tax on sales above $5 million, resulting in fewer transactions in this price range.
New Areas Emerging: Opportunities for Growth
On a positive note, we've seen about 50 new areas crossing the executive luxury threshold in the past month. This is a strong indication that the footing in the luxury market is solidifying, and prices are on the move again. Furthermore, 10 new areas have recently surpassed the $2 million+ threshold, showcasing a continued migration of wealth into emerging power areas. Excitingly, one area has even crossed the $5 million+ threshold, marking a milestone achievement in the last 9 months.
Diving Deeper: Keynote Insights
Recently, we conducted a keynote presentation where we delved deeper into these trends. If you're interested in gaining valuable insights from our research and analysis, don't hesitate to reach out. We're more than happy to provide you with a copy of the keynote for your reference.
Long-Term Growth: A Lucrative Opportunity
Now, let's talk about the big picture. When we analyze the data over longer periods, we find even more reasons to be optimistic. The three-year average growth rate for luxury real estate in these regions stands at an impressive 34.77%, the five-year average is a remarkable 43.57%, and the ten-year average is at 79.19%. These numbers clearly indicate that luxury properties have been outperforming lower price ranges in terms of percentage return.
Investment Opportunities in the Southeast Region
Lastly, it's worth highlighting that the growth trends in the southeast region have been particularly robust. If you're an investor or a real estate market player looking for promising opportunities, these areas are definitely worth considering. The numbers consistently show higher growth rates in these regions compared to others, making them attractive investment prospects.
Remember, the luxury real estate market is all about seizing opportunities and staying ahead of the game. By keeping a close eye on the trends and leveraging the insights we've shared, you can position yourself for growth and success in this exciting industry.
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Year over Year National Luxury Real Estate Report Map:
Here are the May 2023 Luxury Real Estate Report numbers for the data geeks:
Methodology for RE Luxe Leaders Luxury Real Estate Report
The data used in the report is focused on the top one-third of markets in the United States, and is collected on a monthly basis. The data is used to identify trends in luxury real estate at the area level, rather than focusing on individual properties. The report aims to provide insight into luxury real estate trends across the country, by analyzing data from the most affluent and desirable markets in the United States.
We divide and define the US National Luxe Real Estate into three categories for our Luxury Real Estate Report:
- Executive Class. Areas where properties currently average sold prices of $750,000 and higher.
- Luxe. Areas where properties currently average sold prices of two million dollars and higher.
- Ultra-Luxe. Areas where properties currently average sold prices of five million dollars and higher.
A Parting Thought
We hope that the information provided is helpful in guiding you on your journey to building a thriving real estate business.
As luxury real estate consultants, coaches and advisors for Proptech, Fintech, Brands, Brokerages, Teams and Elite agents, we are confident that our resources, insights and strategies can help you achieve your goals.
Remember, success in the luxury real estate industry starts with knowledge and strategy, and we are here to provide you with both.
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