THE MOST LUXURIOUS REAL ESTATE TRENDS OF 2023: ARE YOU UP-TO-DATE?

Much like other real estate markets, the luxury housing market is constantly changing and evolving. Known for their lavish amenities and quality construction, luxury homes provide homeowners with opulence and comfort. Since these needs vary over time, luxury properties must also change to meet buyers' expectations in the market. Therefore, staying current with these trends is the best way to guarantee you get exactly what you want in a luxury home.

Here are the most common luxury real estate trends of 2023.

Despite the trend of oversized properties during the COVID-19 pandemic, smaller luxury homes have been gaining in popularity in recent years. These smaller houses sold for 19 percent faster than larger properties in 2022.

Smaller luxury homes range in size between 2,500 to 3,500 square feet. Typically, these houses serve as a second property or investment opportunity for affluent buyers. Since many of these buyers no longer need a home office to work from, they’re opting to downsize their floorspace to allow for easier and more comfortable living arrangements.

Additionally, higher home prices have helped spur this trend since most smaller luxury properties sell for less than their larger counterparts. Given the lower costs upfront, many wealthy buyers are paying for their smaller houses in all cash, which can lead to a better return on investment (ROI) down the line.

All around, international and foreign real estate transactions are increasing. Foreign buyers continue to eye the United States housing market while Americans turn elsewhere. In fact, according to a recent Coldwell Banker survey, around 92 percent of U.S. respondents reported that they’d be willing to buy a home abroad.

This response is likely due to a higher cost of living and surge in home prices in the U.S. Of the Americans interested in international housing markets, most of their eyes are trained on properties in Canada, Mexico, Central America, and parts of Asia. In comparison, international buyers from China, Canada, India, and Mexico are flooding the U.S. housing market, particularly eyeing California, Florida, and Texas properties.

In November 2022, around 26 percent of all real estate transactions were all-cash sales, which was up from the 24 percent mark a year earlier. Higher interest rates continue to make all-cash sales more attractive for luxury home buyers. These same buyers fund their purchases through stock portfolio loans, private bank loans, and margin loans.

Typically, an all-cash offer is more attractive in the eyes of sellers because it cuts out the middleman, namely mortgage brokers. Whether good or bad, buyers offering to pay in cash are more likely to beat out the competition in competitive markets, giving them an edge when faced with multiple offers and bidding wars. Of all the luxury real estate trends of 2023, if you can afford to pay in cash for a home, you might consider doing so.

Although the housing market has generally seen impressive growth in recent years, the luxury market has surpassed the lower tiers by a wide margin. One explanation is that more affluent Americans are less affected by the volatile job market, putting them in a prime position to take advantage of lower mortgage rates.

Still, this growth has created what is known as a seller’s market, which is a real estate market that favors sellers over buyers. A sales ratio above 20.5 percent is typically considered a seller’s market. May 2023 saw a sales ratio of 37.01 percent, putting it well into the seller’s market territory.

Due to fierce competition during the homebuying frenzy of the last two years, buyers had to make hasty decisions to purchase their homes. Many of those buyers now regret their choices. In fact, in a recent survey, around a quarter of respondents who bought their homes in the last two years said they were not satisfied with their purchase. These respondents cited lifestyle changes, remote locations, lack of neighborhood amenities, and property size as their chief complaints with their purchase.

Couple this feeling of buyer’s remorse with market advantages, including slow home price growth and less competition, and it may spur more luxury buyers to move. If these same buyers do move, they will probably be more careful when purchasing their next house. Still, some buyers may keep their old home and fold it into their real estate portfolio.

Despite a feeling of buyer’s remorse, over a third of survey respondents have cited real estate as the safest long-term investment, ranking it over stocks, bonds, cryptocurrency, and pensions. These respondents believe real estate can diversify their investment portfolio, serve as an inheritance for future generations, and provide profits from rental properties. Therefore, many affluent home buyers remain faithful to real estate investments, which is a good sign if you want to enter the luxury real estate market.

Luxury real estate is an ever-changing market for affluent buyers looking for the latest amenities and trends. From smaller luxury homes to a more globalized approach, luxury home buyers have changed their needs and wants in recent years. Staying current on these latest trends is the best way to secure the luxury home of your dreams. To stay updated on these trends, you need to contact a luxury real estate agent.

Bay Area Fine Living is an Oakland real estate firm known for helping buyers purchase the luxury houses of their dreams. Cultivating years of experience in the industry, the firm constantly stays updated with the latest trends in the luxury housing market. If you’re in the market for a luxury house, then the firm can help you learn the latest trends to guarantee a solid investment. Contact Bay Area Fine Living today for more luxury real estate trends in 2023.