In North America, Luxury Home Buying Is on A Recovery Trajectory
October 15. 2021
The concept of wealth differs across societies, and yet you’ll find particular things that cut across. For example, one is rich when one can buy or build a luxury home and adorn it with the most refined décor.
After the pandemic shattered much of the global economy, there was widespread fear that the luxury home buying market would plunge into disarray. In a sense, it was a justifiable fear.
For example, in the United States, the home market tanked across the board, where existing home sales fell over 32% between March and June 2020. The sales attempted recovery in the second half of 2020 but soon plateaued.
Figure 1: US Existing Home Sales
But while the broader US housing market seems to be losing steam, the luxury home buying end is booming. For example, the Las Vegas luxury homes market saw 759 units sold in June 2021, fetching a record $16.25 million. On the contrary, the market sold 766 units in 2020 and 531 units in 2019.
Other hot markets in the region include Los Angeles Beach Cities, Los Angeles City, Vail, Palm Beach Towns, Lake Tahoe (both in California and Nevada), Sacramento, and East Bay.
According to Institute for Luxury Home Marketing’s September 2021 Luxury Market Report (LMR), homes in North America sold for an average of 100% of the list price in the month. Moreover, the market recorded a median luxury threshold price of $1 million, while the median luxury home sales price was $1.4 million.
Furthermore, figures from the United States National Association of Realtors indicate luxury home sales have been on a positive trajectory for the past three years. For instance, sales for homes in the US priced above $1 million grew 244.5% in May 2021 (year-on-year), far outpacing sales for cheaper homes.
The luxury home buying frenzy comes on the back of an increasing number of buyers starting to return to the larger metropolitan cities. Also, more buyers in North America are purchasing property in urban communities. Most of these buyers want to hold the properties as long-term investments.