In early 2020, if you had asked anyone to predict the near future of the real estate market, very few experts could have predicted a resurgence of this magnitude. Sales in the sector have not only reached pre-covid levels but also exceeded them. More surprising is that the luxury real estate market has led to a resurgence, with the demand for luxury homes in suburban, urban, and country areas going up drastically.
Data from the National Association of Realtors indicates that sales of homes priced $1 million and above witnessed a 244% year-on-year increase in May. This statistic greatly dwarfs its analog in property sales within the $250,000 and $500,000 range, which only grew by 48% in that time.
Why Did it Happen?
Why does Washington, DC’s luxury real estate market continue to outperform lower-cost property?
It is essential to know that this frequently happens. Opulent home buyers and sellers are not usually disturbed by the financial constraints that affect the general population. When it became apparent that we would be living in a pandemic for the foreseeable future, many businesses modified their operations to work remotely. This change afforded luxury home buyers even more mobility without any lasting effects on their spending power.
Unlike regular buyers who lost their access to mortgages after losing valuable work hours, the more affluent were less affected by the change. Buyers with the liquidity required to buy a new home outrightly did just that. It did not matter whether it was an investment in a new home or a second property to wait out the pandemic storm since the distance from their jobs was no longer a problem.
In this market where demand exceeds supply, buyers resorted to buying available properties above their listing prices. To successfully acquire a luxury home in this market, one had to have their finance in order and be ready to pounce on any opportunity.
The pandemic lit a fire in the city’s high-end home market. Real-estate agents say it could become even more competitive as President Biden appointees descend on the U.S. capital.
Preliminary data suggest that housing markets in the Washington, D.C. area are already feeling the surge by the economic crisis—but typical market indicators are sending different messages.
The most significant growth was in Spokane, Washington (10.7%). But the drop in sales volume suggests that price data should be interpreted with a grain of salt. By indexing typical home values to January 2020, we can see how different markets grew at various points through the past year.
Just as it has become challenging to predict the end of the pandemic, it is impossible to foresee how long the housing market will remain this way. However, one thing is sure, in this uncharted luxury real estate market, there are ample opportunities for buyers and sellers.
Yet as the country slowly resurfaces from shutdowns and covid restrictions, housing sales are increasing, fueled by a pandemic that ignited a frenzy of transitions in virtually every corner of the United States.