Where is the Luxury Real Estate Market Heading?

A hot housing market has led to an influx of bidding wars and cash offers in residential real estate – and on top of that, second-home ownership is on the rise. All of these factors beg the question: How long can the luxury housing market sustain this level of activity – and could there be a crash?

On the latest episode of Keepin’ It Real with Nick Bailey, Bailey, President and CEO of RE/MAX, LLC, addressed the luxury real estate frenzy and where the niche market is headed. He was joined by panelists Josh Altman, a California-based top-producing luxury agent and star of Million Dollar Listing Los Angeles, and Amber Bonasoro, a 15-year industry veteran and Executive Director of The RE/MAX Collection, the RE/MAX luxury home marketing program.

What does “luxury” mean?

When talking real estate, “luxury” can be a broad term. Bonasoro helps identify a luxury property as being part of the “upper tier of the market segment” and suggests that comparable properties are the best way for an agent to define luxury in their local market. In general, luxury often denotes a home that is on the higher end of an area’s pricing norms, meaning that the cost of a luxury residence would vary depending on factors like a town’s popularity or local attractions, like proximity to mountains or a beach.

While Altman believes luxury is defined by the desires of the individual, he works in one of the priciest housing markets in the U.S – Los Angeles – where he considers a luxury home to be over $5M. He attributes the more recent influx of luxury buyers to consumers taking advantage of historically low mortgage rates.

How can agents break into the luxury sector?

Agents may feel intimidated as they enter a new real estate realm. To start, Bonasoro recommends attaining the Certified Luxury Home Marketing Specialist (CLHMS) designation to learn best practices and gain foundational skills.

Altman cautions that success in luxury takes time.

“You see me on a TV show selling a lot of real estate and closing deals in an hour [but that’s] not always the case. I sold zero houses the first six months when I got started. And the first year, I sold four houses. So you have to understand it’s a marathon, not a sprint, [and] it takes a minute to get into that luxury market,” Altman says.

He suggests joining a team that specializes in luxury real estate and offering to get involved with all facets of the process, like facilitating open houses. Another route he suggests is co-listing with a fellow agent on a luxury property.

How important is luxury marketing?

“Our clients are homeowners who like to know that in this market – because the world is so small now – their houses are being seen globally, not just locally. So, you have to have those outlets. You have to be comfortable in listing appointments talking [about] what connections you have globally,” Altman says.

“You have to be a global marketing agent, not just local,” he adds.

Nodding in agreement, Bailey touts that one of the many benefits of being affiliated with RE/MAX – which has a presence in over 110 countries and territories – is the powerful global connections agents and brokers make throughout the network, and the technology to support them.

“Video is key,” adds Bonasoro, explaining that storytelling is an integral component of attracting luxury buyers to a property.

What is the future of luxury real estate?

Bonasoro suspects that all residential real estate will slow down a bit, giving buyers more time to decide on high-end properties.

Altman, however, doesn’t see an ease happening any time soon in his market. While inventory of existing homes remains low, he also believes that high building costs – especially due to short supply of materials – are preventing new homes inventory, too.

“The market’s going to be strong not only this year, it’s going to be strong next year,” Altman says.

Bailey concludes, “The luxury housing market isn’t going anywhere. As wealth continues to build in America and home prices continue to appreciate, luxury will play a major role in the real estate industry. Regardless of what happens, though, great agents who know their markets have a good network and can operate their businesses in any price range they want.”

Tune in to the latest episode to hear more about luxury – as well as ultra-luxury – real estate and watch as the panelists guess the prices of homes around the U.S.

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