The pandemic’s impact on how buyers today define luxury has spurred new trends and called attention to different markets moving deeper into 2021, according to Coldwell Banker’s “The Report: 2021 Global Luxury Market Insights,” released on Wednesday.
In compiling “The Report,” Coldwell Banker partnered with The Institute for Luxury Home Marketing, Wealth-X and other third-party data sources to analyze a variety of data points like median list prices of sold properties, median sold prices, median days on market and more. The company also spoke with 78 Coldwell Banker luxury property specialists across 65 global markets for on-the-ground market insights.
The Realogy brand’s report outlines how buyers’ reinterpretation of luxury as a place for family, health, space, security, privacy and accessibility to the outdoors has spurred a drive for properties like megamansions, luxury compounds and even private islands.
In fact, more than half of luxury property specialists surveyed by the brand reported that square footage was the no. 1 amenity for buyers, reversing a “less is more” trend seen in recent years. Sales for homes over 5,000 square feet rose 17 percent from 2019 to 2020.
Other top luxury preferences that Coldwell Banker saw emerge in the last year include home offices, second homes and a preference for single-family detached homes. Meanwhile, the company also saw many markets transition from buyer or balanced markets to seller markets in 2020, a trend expected to continue in 2021. “Trailblazers,” a new luxury demographic the company recently identified, also helped spur buyer traffic away from cities toward places like hidden-gem towns and the suburbs.
“2020 was a transformative [year] for the luxury real estate market,” Jade Mills, president of Jade Mills Estates and International Ambassador of Coldwell Banker Global Luxury, said in a statement. “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 homebuyer 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,” she added.
In 2020, four new regions emerged in the top 10 luxury market performers:
- King County, Washington: This market, home to Seattle, Bellevue, and surrounding areas, saw a perfect combination of pent-up buyer demand, limited inventory and prime locations for buyers seeking more space. The combined single-family and attached homes sales ratio in 2020, or percentage of available listings that sold, for this market was 37.7 percent.
- East Bay, California: As buyers shifted to working remotely, this market outside of dense, pricey San Francisco picked up speed for both single-family and attached-home sales. In response, the sales ratio increased over 100 percent after July, resulting in a 67.7 percent sales ratio for the year.
- Colorado Springs, Colorado: Millennials and out-of-state buyers flocked to this mountain town during the pandemic, yielding its strong combined sales ratio of 36.35 percent for single-family and attached homes.
- Fairfax, Virginia: This Washington, D.C. suburb saw a surge in demand for luxury townhomes, leaving just a month of inventory for those priced at $645,000 or up, and less than a month for those priced at $1 million and up. The combined sales ratio for single-family and attached homes in 2020 was 24.3 percent, and nearly 52 percent for attached homes alone.
As for secondary markets on the rise, Coldwell Banker identified Phoenix, Denver and Dallas as ones to watch in 2021. All three markets saw an influx of out-of-state buyers during the pandemic as work-from-home policies became more prevalent and buyers looked for more spacious, affordable cities to live in.
California was a big feeder market for all three of these cities, but Denver and Phoenix actually saw many luxury buyers migrate in from Texas as well (among other places).
Meanwhile, surprise markets that exceeded the company’s expectations for 2020 included Salt Lake City, Sacramento and St. Louis, all of which benefited from buyers exiting other nearby congested, pricey cities as their priorities shifted during the pandemic.
“COVID-19 is definitely a big impetus for the recent strength [in St. Louis],” John Ryan, a Coldwell Banker Realty-Gundaker Agent, said in the report. “After being cooped up in quarantine, people definitely had the urge to upgrade into living situations with more space and amenities.”
“The luxury real estate market showed its resilience through a dynamic year as the market accelerated many ongoing trends that were already occurring,” Coldwell Banker’s Vice President of Luxury Craig Hogan said in a statement. “With these timely perspectives, our luxury property specialists can prepare for what’s to come in 2021 and continue to act as trusted advisors as many shifting buyer trends and preferences are here to stay.”