A new year may be here, but those of us in the luxury real estate world still feel the aftershocks of 2020. No doubt our business has changed profoundly, from the way we serve our affluent clients to how people buy and sell and even what home means to them. If 2020’s real estate story could be summed up with the word “resilience,” 2021 could be the year of “reimagining.” The recently released 2021 Report published by the Coldwell Banker Global Luxury® program brings this into greater focus.
While there were many trends that emerged from 2020, I want to highlight five key themes that surfaced during our review of annual luxury home sales data and surveys of Luxury Property Specialists for “The Report.” These five trends offer a roadmap for how we move our industry forward this year and serve our clients through these still-uncharted waters. They also underscore the enduring importance of home and the evolving yet central role that modern luxury real estate agents play in their clients’ lives.
1. Real estate resilience
What 2020 showed consumers was that the real estate industry is adaptable. We did virtual showings. We increased staging budgets. We modified in-person showings based on local restrictions. We made deals happen. Because of our quick-on-our-toes response, we were ready to serve clients during what eventually became a luxury real estate boom. On the commercial side, lower-priced publicly traded real estate investment trusts piqued the interest of private buyers of commercial properties. Private investors were also looking to diversify from stocks, and real estate became a logical class.
2. Investment diversification among the affluent
Markets of all types defied predictions last year. At the onset of the pandemic, a recession quickly followed, but a massive fiscal and monetary stimulus, combined with record-low interest rates and news of a vaccine, helped to swing some of the initial market pessimism to budding optimism. Buoyancy was not confined just to stocks. Other asset classes, such as real estate, fine art, and precious metals, also surged.
3. Intangible luxury
Intangibles — family, health, space, and security — became the new luxuries of 2020, and a home became one of the most outward expressions of these prized values. This was a trend previously identified in our “A Look at Wealth: New Affluent Trailblazers” report in the fall, and we expect it to continue in 2021.
4. New affluent demographics and migration patterns
This was our thesis from that report — and it still stands. As remote work normalized and lives recentered toward home, a new group of “affluent trailblazers” emerged in 2020 as they migrated to new locations. The three types of trailblazers — explorers, new suburbanites and resorters — defy traditional wealth or demographic categorizations. Less concerned about status, explorers sought out hidden-gem locations in rural areas or small towns, where their dollar carried them further. New suburbanites were responsible for the revival of the suburbs. Meanwhile, resorters flocked to their favorite vacation destinations. While it remains uncertain whether these lifestyle changes and migration patterns will be part of our new normal or morph into something else, we are watching the trend closely.
5. Big is back in vogue
Remember the ‘less is more’ trend of the last few years? Well, that completely reversed in 2020! Of the nearly 40 Coldwell Banker Global Luxury Specialists surveyed for “The Report,” nearly 55% said that more square footage was the No. 1 amenity that flipped in demand from 2019 to 2020. Many listed mega-mansions, gated homes, large homes with multiple rooms and acreage, family compounds, and even private islands — which can typically take years to sell — as the ultimate social-distancing retreats. Will this trend be around in five years? According to the Global Luxury Specialists we surveyed, a majority of them expect buyers to revert eventually to homes with smaller footprints. Of course, if there was one lesson to come out of 2020, it’s that anything is possible.