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After three years of unprecedented ups and downs, many luxury real estate agents barely remember what “normal” looks like. There have been lockdowns, supply chain challenges, rising inflation, and other issues that have impacted markets. Yet through it all, top agents adjusted their businesses and expectations accordingly, and luxury homes continue to sell.
Now the question on everyone’s mind is: what’s in store for 2023? This is the topic that Brad Nelson, Chief Marketing Officer at Sotheby’s International Realty, will be exploring on January 26th in the next Sotheby’s International Realty Insider open webinar, where top agents will explore this year’s market trends, data, and opportunities.
All are welcome and invited to register. In advance of the webinar, here are insights from the featured experts.
In 2023, what types of luxury homes or markets will likely be in demand?
Michael Martinez: My team and I have already witnessed and experienced what it’s like to bring the online and offline worlds together through the metaverse. Some forecasters predict the market could soon surpass $1 billion based on the current growth rate.
Diletta Giorgolo Spinola: We are seeing some new luxury areas apart from Tuscany, the very top cities — Rome, Milan, and Florence — and Lake Como. It used to be Lake Como with English buyers (in Italy) because of George Clooney and the Villa d’Este. Now people want to be in places that are as beautiful and maybe less expensive. We have seen a really strong comeback of high-net-worth U.S. buyers on the island of Capri.
How does this compare to the U.S.? Are similar trends playing out on this side of the Atlantic, with rising demand in vacation markets such as the Hamptons and Aspen?
Dana Trotter: The market is still very competitive because inventory is still at historic lows. But we expect the market will settle out as more listings come online. While there will be turnover, many owners will hold because they want an asset to use in the Hamptons regardless of fluctuations in the rental pricing.
Chris Klug: If it’s priced in the right range, and it’s a special property, it’s still moving.
DT: There’s only one chance at a first impression when launching a property, and it helps to be competitively priced.
From a global economic perspective, 2022 was not an easy year. Are there specific challenges that you expect to carry over into 2023?
CK: There are several macro challenges — Ukraine, interest rates, and inflation are all affecting it.
MM: Today’s metaverse may be increasingly sophisticated, but it’s still not regulated — and in fact, its continuity isn’t necessarily inevitable. Phishing and other types of data theft remain a legitimate concern, and I would never advise my clients to purchase virtual property without also cautioning them to seek the professional counsel of their attorneys and financial advisors.
DGS: The importance of clean air has returned to everyone’s attention. Small villages surrounded by nature, with local markets selling local products and a slower-paced routine, are now the lifestyle choice of many citizens. There is a great need to spend quality time in contact with nature, living authentic experiences.
Looking at 2023 through the long lens
Markets may be fluctuating, but it’s possible to parse the trends and make productive future predictions. Spinola’s story provides a good demonstration of this.
Throughout 2022, she tracked clients gravitating away from the popular cities of Rome, Milan, and Florence. But rather than flocking to much-touted Tuscany, they’re reappraising the unique beauty of Umbria; in lieu of the widely-venerated Lake Como, they’re appreciating the more open vistas of Lake Maggiore. Many markets are in the midst of subtle but obvious shifts, and agents need to recognize them while they’re still nascent.
As buyers continue to aspire towards purchasing properties in prized second-home markets, it’s just like Trotter said — inventory remains low. In an area like the Hamptons, homeowners may hold off on selling because they’re reluctant to part with such a desirable and valuable asset, and sellers with rare properties may auction their homes in high-profile bidding wars rather than opting for more traditional sales.
Meanwhile, there’s the challenge of inflation, and the continuous raising of interest rates by central banks in order to tame it, as observed by Klug. In 2023, this is one of the issues that will be top of mind for buyers, sellers, and agents alike.
The Sotheby’s International Realty Insider webinar takes place on Thursday, January 26, at 1:00 pm ET. This is a panel you won’t want to miss! Make sure to register in advance; this is an open webinar available to all agents.