Luxury housing emerged from the lockdowns of COVID-19 with unbelievable strength and has reached unprecedented levels.
In June of last year, housing climbed out of the COVID lockdowns and resurfaced firing on all cylinders. It was as if someone had flipped a switch. Then in 2021, the real estate marked evolved further, from red hot to white hot. Overnight, the real estate industry had become accustomed to throngs of showings, multiple offers, and homes selling for more than their asking prices. A surprising twist was that the luxury housing market surged right along with the lower price ranges and at a record pace.
What sparked the wave of luxury sales? The run-up on Wall Street has certainly helped. After the S&P plunged 32% at the beginning of the pandemic in March 2020, it nearly doubled since, swelling by 94%. It surpassed the prior, pre-COVID, record height in August 2020. The record low interest rate environment is a key factor in luxury’s elevated demand as well. And, the inventory crisis does not only include the lower ranges, luxury buyers have been confronted with an extremely limited supply of available homes to purchase.
The luxury home market in Orange County, defined as the top 10% of all closed sales, moved from $1.25 million in 2020 to $1.5 million at the start of 2021. In September, there were 524 luxury closed sales. That would be a record level in any other year, but not this year. April through August were all higher, with a 672-peak reached in June. Last year’s record, 420 luxury sales, was achieved in September and surpassed the prior annual record set in June 2017 by 39%. Even with September’s slight seasonal dip in home sales above $1.5 million, it is still 25% higher than last September.
Excerpt taken from an article by Steven Thomas.