In the previous years, some thought the market for luxury homes would cool down in the following years. Some reports then said house buyers had not experienced much relief in the past years with the median home value remaining stagnant. But current reports show that the market continues to maintain a healthy state at the moment.
Younger Buyers are About to Conquer the Market
The luxury homes real estate industry has attracted new real estate consumers—younger buyers. Studies described these buyers as the “affluent consumers.” The study found that these buyers, aged 25-49 years old, grew up in wealthy homes, expecting inheritance worth at least $4M.
Reports also mentioned that 54 percent of the affluent consumers look for urban homes with square footage over 5,000 square feet.
Beyond the square footage, real estate companies that specialize in luxury homes, like Retter & Company Sotheby’s International Realty, can provide buyers sufficient information about the market. Data on sale prices over the years, annual sales activity, and monthly inventory comparison in specific locations can tell you if you’re making a smart investment.
But before signing that sale agreement, be aware of interest rates.
The Slight Rise in Mortgage Rates Won’t Affect the Market That Much
The market started off strong last year, but several observers recently noticed the slight rising of interest rates on the luxury market.
Although buyers of luxury properties don’t rely that much on mortgages compared to purchases of homes with lower prices, those who borrow see a 0.25 percent increase as insignificant. Even a 4 percent rise in the interest rate won’t bother a buyer’s decision as much.
Millennial Renters Become Homeowners
Millennial first-time buyers become big income gains for the market. Since most of the renters long to own their own homes, people foresee these people to purchase homes.
Greater income gains for millennials who are about to enter their early 30s would generate demand from the luxury homes real estate industry. Trulia and Census Bureau reported that the homeownership rate for homes owned by people below 35 years old rose to 35.3 percent in the second quarter.
Reports about the market flattening and softening over the next few years can guide you through your decision. With the right information, you’ll know whether it’s a good time to buy a luxury home now.