Trends that have taken hold during the pandemic are poised to fuel another banner year for the global luxury housing market in 2022, according to a report from Sotheby’s International Realty.
The report is predicting a strong year for the sector. Bloomberg noted key factors behind the forecasted boom include still-low interest rates, inflation and hybrid working options available to many employees looking to grab more land.
“The real estate market is now being driven by hybrid work vs. remote work,” said Sotheby’s International Realty chief marketing officer Bradley Nelson.
The ability to work remotely could be advantageous to some in the luxury market who want to take advantage of markets without state income taxes, such as Florida and Texas. Conversely, international markets imposing increased taxes on luxury deals such as Ireland and Canada could suffer.
“You’re going to see the greatest investments continue to be in tax havens,” Nelson said to Bloomberg.
Another trend Sotheby’s is looking out for is increased transactions in cryptocurrency.
“If wealth creation drives a market, and crypto is driving wealth creation, then I think there’s going to be an increased demand for that kind of payment, as opposed to cash,” Nelson said, looking ahead to the next five years.
The report predicts other trends to continue into 2022 in the luxury space will include fading demand in the suburbs and higher prices in the exurbs, as well as a rebound in urban centers. Nelson said it was virtually impossible to underprice a home as demand and low supply would pull up competition, but the same isn’t necessarily true for overpricing a home.
“It’s certainly possible to overprice a property,” Nelson said. “But ultimately, with some of these ambitious asking prices, I think it’s a strategy of price discovery.”
In Manhattan, the luxury market kicked off 2022 with a strong start. The market saw 22 luxury contracts signed between Dec. 27 and Jan. 2, the highest volume to start the year since Olshan Realty’s luxury market report began in 2006.
[Bloomberg] — Holden Walter-Warner