It’s my pleasure to present our clients with an exclusive “first look” at Sotheby’s International 2022 Luxury Real Estate Outlook. This in-depth report discusses the key demographic and workplace changes driving the luxury housing market.
Key experts in the field present their economic predictions for what is shaping up to be another very strong year in the luxury housing market in Edina, in Minnesota, and throughout the United States. Check out the full report here.
A. Bradley Nelson, the Chief Marketing Officer for Sotheby’s International, presents a cogent summary of where luxury housing, and real estate in generally, is headed in 2022:
The end of last year showed signs of a slight shift in the frenzied market of 2021, including fewer bids on houses, and homes spending a little longer on the market. But a true buyer’s market isn’t likely, as people continue to move, and real estate is considered a hotter investment than ever.
There are two major issues keeping the market on the side of sellers: low inventory and material supply slowdowns. As such, most experts predict prices will increase throughout 2022, especially after the slower winter months.
As borders reopen, pent-up demand from international buyers will compete for limited inventory with local buyers. That might spell good news for financial capitals like New York City and London.
As such, we’ll look into the future of big cities—many of which bounced back more quickly than expected post-Covid lockdowns—as well as how the market is likely to shape up in second-home locations and suburbs, which saw prices skyrocket due to pandemic-related migration patterns.
But if 2020 and 2021 were fueled by remote work, we’re predicting that in 2022, hybrid work is likely to drive the market, with many looking for larger homes that can accommodate remote work yet remain within commuting distance to their office. We also explore areas around the world poised for tax changes that may influence buyers’ real estate investment plans.
Millennials are changing the market, too, finally giving up their rentals and buying homes—often with money passed down by their parents. Tech companies—many of which have relocated, expanded their headquarters, or are planning to do so—are affecting the migration patterns of these millennials (and Gen Z, too).
In fact, the strength of secondary and tertiary cities (now often tech hubs) is one of the trends we’re exploring, in addition to the popularity of serviced apartments and branded developments as low-maintenance homes; the increased popularity of eco-conscious house buying (think solar energy and electric-car chargers), and even the emergence of cryptocurrency, which is still in nascent stages with regards to buying and selling property, but not for long.
Finally, we’re diving into some luxury lifestyle trends. From wine to NFTs to handbags to sneakers, more high-net-worth individuals of all ages—many new to the auction world—are looking to put their money into assets they can enjoy now, with hopes of appreciating value over time.