A recent report indicates that real estate remains in a strong position for the remainder of 2022 and heading into 2023 as more affluent consumers are turning to real estate to diversify their portfolios and as a long-term investment strategy. In fact, 80% of U.S.-based high-net-worth consumers agree that real estate is a safe investment, and over one-third agree that it is the safest investment one can make when compared to stocks, bonds, cryptocurrency and pensions, according to “The Trend Report,” released this week by Coldwell Banker Real Estate LLC, an AnywhereSM (NYSE: HOUS) brand, and the Coldwell Banker Global Luxury® program.
Additionally, consumers are over three times more likely to think that 2023 will be a better time to invest in real estate compared to 2022 – rising a whopping 42% from only 11% a year ago.
The Trend Report, paired with a survey conducted by Censuswide of over 2,000 U.S.-based high-net-worth consumers, insight from Coldwell Banker Global Luxury Property Specialists and data collected by the Institute for Luxury Home Marketing and Wealth-X, provides an in-depth analysis of what’s driving real estate investment, emerging worldwide luxury real estate market trends, market growth opportunities and global wealth.
The top trends shaping the 2022 luxury real estate market:
1. An Unconventional Buyer’s Market
2. Smaller Square Footage
3. Reconsidering Relocations
4. Searching for Stability
5. Moving Beyond Borders
6. Creative Financing
A consistent theme throughout The Trend Report, as found through the survey findings, is that investment is continuously top-of-mind for the wealthy, no matter the market environment. Affluent consumers consider real estate a prime asset for building, maintaining and growing wealth.
Key survey findings featured in The Trend Report include:
• Property investment is a priority
Traditionally seen as a hedge against inflation, real estate has the ability to provide financial, emotional and psychological stability in the face of rising uncertainty. Over time, most home values typically appreciate, underscoring how much affluent consumers play the long game when it comes to financial and lifestyle investments today.
o The top reasons respondents purchased real estate as an investment:
Diversify their portfolio (46.7%)
Long-term investment (46.1%)
Financial gain from rental income (45.9%)
Inheritance for their children (45.3%)
o The top five types of homes respondents own as an investment property:
Multifamily Home (39%)
Single-family home (34%)
Fractional ownership (28%)
o 77% of U.S. luxury consumers surveyed for the report own an investment property. Of those, nearly two-thirds own two or more properties.
• More opportunities for buyers on the horizon
The luxury real estate market has shown resilience, leaving buyers with plenty of purchasing power to still acquire the home they desire. Affluent buyers remain bullish as most continue to see the value of property investment.
o 75% of respondents noted that current market conditions have changed their mind about buying a home or investment property in the future as luxury consumers remain optimistic about the market. The top three reasons?
More inventory (42%)
Rising rents (38%)
Stock volatility makes real estate a better hedge against inflation (38%)
• Secondary homeownership trumps purchasing a primary residence
With their primary residences accounted for, luxury buyers are turning their attention to building generational wealth by investing in multiple, often lesser-priced, secondary-plus properties.
o 40% of respondents who are planning on purchasing a home in the future anticipate doing so in the next 1 – 3 years.
o Of those planning to purchase a home in the future, 72% stated that their new home would either be a second residence, rental property or vacation home.
• Affluent buyers get creative with financing
Rising interest rates are inspiring a new generation of high-net-worth buyers to get creative with their real estate financing.
o Over half of luxury consumers plan to finance their next home purchase via cash offers (51%) or with a private wealth mortgage (48.1%).
o Buyers are also using nontraditional bank loans, seller carryback financing and rate buy-downs.
“Luxury real estate investment continues to be hot for wealthy individuals in the U.S. and abroad. Those consumers who don’t need to move and have capital to spend will continue looking elsewhere for opportunities to grow their wealth through investments in smaller homes. Backed by data and expertise, Coldwell Banker Global Luxury Property Specialists have the knowledge and network support to provide end-to-end guidance for all those looking to buy their next dream property.”
– Liz Gehringer, President of Coldwell Banker Affiliate Business and Chief Operating Officer, Coldwell Banker Real Estate LLC
“While the luxury property market is now trending towards balance, there is still insatiable demand from wealthy buyers looking to diversifying their portfolios and build long-term wealth through investing in real estate. This strategy powered by the wealthy is the driving force that we see throughout The Trends Report and really underscores the power they still have when it comes to purchasing the properties that they desire.”
– Michael Altneu, Vice President, Coldwell Banker Global Luxury
“Here in Southern California, we are always seeing creative ways clients can leverage to get their property sold. When purchasing their next property, buyers are looking for more than just a house – they’re looking for a turnkey-ready dream home in their top desired location. Yesterday’s agent is today’s lifestyle ambassador, and they must be prepared to connect the dots between all aspects of their client’s life.”
– Jade Mills, President, Jade Mills Estates and International Ambassador of Coldwell Banker Global Luxury®
The Coldwell Banker Global Luxury® program collaborated with Censuswide, the Institute for Luxury Home Marketing and Wealth-X to provide insights into wealth creation, real estate, property investment, luxury spending preferences and emerging trends. Research conducted by Censuswide took place between August 2, 2022 and August 15, 2022. The survey reached 2,001 U.S. consumers aged 18+ with a household income of $1M+ and who have bought a home in the U.S. worth $1M+, with quotas of a minimum of 100 per the regions targeted. Censuswide abides by and employs members of the Market Research Society which is based on ESOMAR guidelines and principles. The Institute for Luxury Home Marketing analyzed data for the top 10% of 120 U.S. markets. Data contained is from January 1, 2019 to August 31, 2022, and has been computed by the Institute for Luxury Home Marketing’s data research partner and shared with Coldwell Banker Global Luxury® and based on information attained both privately and publicly. The Top 10% is defined as homes (or in terms of inventory or list prices), matching or exceeding the 90th percentile sold price for homes sold from January 1, 2019 to August 31, 2022. For more information on how data was collected and defined, please refer to the full methodology on page 4 of The Trend Report.
About Coldwell Banker Global Luxury®
The Coldwell Banker Global Luxury® program legacy traces its roots to 1933 and has been a world leader in luxury real estate since. Coldwell Banker Global Luxury Property Specialists are an exclusive group within the Coldwell Banker organization, making up under ten percent of independent sales associates affiliated with the brand worldwide. Coldwell Banker affiliated agents conducted 50,355 transactions of homes priced at $1 million or more in 2021. This equates to $267 million in luxury sales every day (+59% from 2020) with an average sales price of $1.9 million in this category. Coldwell Banker, the Coldwell Banker logo Coldwell Banker Global Luxury and the Coldwell Banker Global Luxury logo are registered marks owned by Coldwell Banker Real Estate LLC. Each franchise is independently owned and operated.
Anywhere Real Estate Inc. (NYSE: HOUS) is on a mission to empower everyone’s next move. Home to some of the most recognized brands in real estate – Better Homes and Gardens® Real Estate, CENTURY 21®, Coldwell Banker®, Corcoran®, ERA®, and Sotheby’s International Realty® – the AnywhereSM portfolio includes franchise and brokerage operations as well as national title, settlement, and relocation companies and nationally scaled mortgage origination and underwriting joint ventures. Supporting approximately 1.5 million home transactions in 2021, Anywhere is focused on simplifying, digitizing, and integrating the real estate transaction for all consumers, no matter where they may be in their home buying and selling journey. With innovative products and technology, Anywhere fuels the productivity of its approximately 196,200 independent sales agents in the U.S. and approximately 136,400 independent sales agents in 118 other countries and territories. Recognized for eleven consecutive years as one of the World’s Most Ethical Companies, Anywhere has also been designated a Great Place to Work four years in a row, named one of LinkedIn’s 2022 Top Companies in the U.S., and honored by Forbes as one of the World’s Best Employers 2021.