REALM, the first globally collaborative real estate platform that combines real-time data with human experience and networking, recently completed a comprehensive membership Economic Forecast Survey for 2022.
Valuable industry insider results focus on the latest in-demand amenities and design features in the luxury and ultra-luxury markets. REALM’s survey asked key questions on topics ranging from sales volume to interest rates to inventory expectations, to what is driving individual markets for 2022.
“REALM members represent the most elite luxury real estate professionals in the industry, with a significant number of members included on the REAL Trends/Wall Street Journal’s The Thousand, which ranks the top producers in the U.S,” says Julie Faupel, REALM founder, and Chief Executive Officer. “Their ability to forecast trends we’re seeing for 2022 is a value unrivaled in our industry,” Faupel adds.
Many REALM members experienced 2021 as their strongest year in the industry ever. As we move into 2022 there is intelligent optimism and renewed energy among REALM’s members for another record-breaking year. Below are the questions REALM members responded to.
Many REALM members experienced record sales in their markets across the U.S. in 2020. As we wrap up this year, how have sales been for you in 2021?
As luxury markets around the U.S. hit historic highs in sales activity and selling prices, REALM members report 2021 was a personal best year for many. Almost 80% saw their sales surpass those of 2020. Over 14% had 2021 sales numbers around the same compared to the previous year. Members who enjoyed increased sales hailed from such diverse locales as Atlanta, Nantucket, San Francisco, New York, Wyoming, Cape Cod, Chicago, Salt Lake, Napa Valley, Connecticut, and Santa Barbara to name just a few.
Do you predict that the “great migration” of luxury buyers moving that we saw early in the Pandemic will continue in 2022 and why?
As reported in REALM and WealthX’s 2021 report, urban areas shut down when the pandemic became reality resulting in the “great real estate migration” to the suburbs and beyond. Buyers sought larger properties with outdoor amenities where multi-generations could shelter safely. Almost overnight what previously had fallen in the “wants” category for buyers became “must-haves.”
Here’s why close to 85% of respondents expect 2022 to continue the “great migration.” Debra Johnston of Coldwell Banker Realty in Atlanta said, “Some buyers are anticipating what the market will do and others are making bigger and longer-term decisions.” Across the county in San Francisco’s Kevin Wong of Compass is “seeing our HNW clients using real estate to further diversify their asset portfolio and continue to purchase real estate outside of their current location to keep their options open.”
Will interest rates change in 2022?
Within the last several weeks it was forecast that the Federal Reserve would raise rates several times in 2022. It’s a wait-and-see situation for now. REALM asked members to weigh in on potential rate changes. The majority (92%) think rates will “rise a little.”
Will prices for luxury residences change in your market in 2022?
REALM Members depending very much on location had mixed opinions on luxury market price increases in 2022. With 66% of members responding who expect prices to “rise a little,” 17% look to prices remaining stable. An additional 16% of members are forecasting prices will rise a lot.
Will the inventory of luxury homes change in your market in 2022?
Inventory constraints across most markets at all price points was the headline story of 2021. Almost half of REALM members (45%) expect inventory to remain the same. Other members are equally split between expecting more inventory and less inventory becoming available in 2022. Around 28% forecasted more inventory while close to 27% believe less inventory will be on the market. Ed Kaminsky President & CEO of Kaminsky Real Estate Group in Hermosa Beach, California expects more inventory. “The migration sellers will want to sell so they can get to their new location. Sellers who are profit-motivated might sense an incredible increase in equity and will want to take advantage of it.”
Which factors will drive sales of homes to your market?
A variety of key market fundamentals will be key to driving home sales in various markets. According to 71% of REALM members, an increased desire for a second home will drive sales in their respective markets. Buyers and sellers ranked relocating second, garnering 52% of responses, while 44% of members looked to Millennial buyers to fuel sales.
Compass agent Philip Berson who focuses on the luxury Los Angeles suburbs of Calabasas, Hidden Hills, and Malibu looks to “sellers and buyers relocating out of the market, wealth transfer from parents to adult children and an increased desire for secondary homes” to fuel the market. Other REALM members like Compass agent Dave Gove of Lake Tahoe feel that “there is an increased desire for secondary homes plus people want out of the cities still.”
What top luxury amenities will your luxury buyers look for in 2022?
REALM members around the country agree that luxury and especially ultra-luxury buyers expect five-star amenities in 2022. Whether they are purchasing a Napa Valley estate or Malibu beachfront property here’s what makes the “must-have” list. Fully appointed outdoor chef’s kitchens became even bigger since the pandemic began as Sunday night at home suppers became daily rituals. With climate change top-of-mind, environmentally-friendly green living and sustainability can make or break a deal. “People want more acreage. For second homes it’s about land, golf, family compounds, sustainable living, and wide-open spaces,” notes John Eric of Compass on Arlington, Virginia.
“Acreage, views, access to lifestyle amenities like skiing, hiking, fishing, horse and golf are what people want today. They are also driven to “private residence clubs with many amenities so that they can have all the lifestyle benefits in the “safety” of their campus,” explains Faupel. Waterfront and view properties also check the boxes for that luxury buyer whether in Florida or the Rocky Mountains.
What key design elements will your luxury buyers seek in 2022?
It’s no surprise as people have come to value home as their most prized asset that elements to enjoy that home with family and friends ranks highly. Think swimming pools, expansive home gyms with sauna and steam, and luxury home theatres with state-of-the-art technology. Ruth Kennedy Sudduth, Principal and Vice-Chair of LandVest in Boston points to “multi-generational accommodations” for luxury buyers.
John Eric of Arlington, Virginia where some high-powered politicians call home notes, “in our market, it’s about expanded home gyms, panic rooms, in-home medical suites for telemedicine and the all-important backyard needs of pools, outdoor kitchens, and ADUs.”
As the intrinsic value of the home remains a top priority for many, REALM will look to 2022 to track more as trends to emerge.