{"id":175014,"date":"2024-07-05T11:23:59","date_gmt":"2024-07-05T17:23:59","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=175014"},"modified":"2024-07-28T06:59:06","modified_gmt":"2024-07-28T12:59:06","slug":"luxury-homes-reach-highest-prices-yet-as-investors-look-for-deals","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/luxury-homes-reach-highest-prices-yet-as-investors-look-for-deals","title":{"rendered":"High-End Homes Hit Peak Prices as Luxury Investors Scramble for Better Deals"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm\/?e=BIGPOC1730857260\" width=\"100%\"><\/iframe>\r\n  \n\n\n\n\n<p><span data-preserver-spaces=\"true\">Home prices are rising <\/span><span data-preserver-spaces=\"true\">across the country<\/span><span data-preserver-spaces=\"true\">, but luxury home prices are skyrocketing. According to <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.redfin.com\/news\/q1-2024-luxury-report\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">data from Redfin<\/span><\/a><span data-preserver-spaces=\"true\">, luxury home prices rose twice as fast as non-luxury homes in the first quarter of 2024.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">But even as prices jumped, sales are still rising, even as prices for non-luxury <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/homes-sales-bottom-out-may-2024\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">homes have declined<\/span><\/a><span data-preserver-spaces=\"true\">. The median-priced luxury home sold for a record $1.225 million in the first quarter of 2024, up 8.7% year over year. At the same time, sales of luxury homes were up 2%, compared to a decline of 4% in non-luxury homes, which sold at an also-record median of $345,000.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Why Are Luxury Home Prices Rising So Fast?&nbsp;<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">The luxury real estate agents we interviewed all agreed on one thing: The <\/span><span data-preserver-spaces=\"true\">rise in prices<\/span><span data-preserver-spaces=\"true\"> is <\/span><span data-preserver-spaces=\"true\">largely due<\/span><span data-preserver-spaces=\"true\"> to a lack of supply. Shocking.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">\u201cThere isn&#8217;t enough inventory for people to buy,\u201d Jason Mudd, managing partner at real estate agency <a href=\"https:\/\/cindyraney.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">Cindy Raney &amp; Team<\/a> in Fairfield County, Connecticut, told BiggerPockets. \u201cSo long as you&#8217;ve got this huge inability to build enough homes, you&#8217;re going to have a supply-and-demand issue.\u201d&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">While the total supply of luxury homes rose 13% year over year, <\/span><span data-preserver-spaces=\"true\">supply<\/span><span data-preserver-spaces=\"true\"> is still below pre-pandemic levels, according to Redfin<\/span><span data-preserver-spaces=\"true\">, which<\/span><span data-preserver-spaces=\"true\"> looked at homes estimated to be in the top 5% of their metro area based on market value.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">There\u2019s a lot of cash <\/span><span data-preserver-spaces=\"true\">being made<\/span><span data-preserver-spaces=\"true\">, and many luxury real estate buyers are ready to <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/cash-transactions-now-making-up-a-third-of-sales\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">pay in cash<\/span><\/a><span data-preserver-spaces=\"true\"> or almost all cash. <\/span><span data-preserver-spaces=\"true\">This<\/span><span data-preserver-spaces=\"true\"> is helping contribute to demand, as luxury homeowners aren\u2019t as constrained by <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/what-is-a-mortgage\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">mortgage<\/span><\/a><span data-preserver-spaces=\"true\"> rates, Mudd said.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Part of this demand for luxury homes is because of the changes in how people live today,<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Nicole Beauchamp, associate broker at Sotheby\u2019s International Realty in NYC, says, \u201cMore people are dividing their time between more residences, and that also creates opportunity on the investment front,\u201d she explained.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Some of Beauchamp\u2019s clients <\/span><span data-preserver-spaces=\"true\">are buying<\/span><span data-preserver-spaces=\"true\"> their third, fourth, or <\/span><span data-preserver-spaces=\"true\">even<\/span><span data-preserver-spaces=\"true\"> fifth property.<\/span><span data-preserver-spaces=\"true\"> While some <\/span><span data-preserver-spaces=\"true\">are <\/span><span data-preserver-spaces=\"true\">bought<\/span><span data-preserver-spaces=\"true\"> as long-term investment properties, some buyers are looking for <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/buying-vacation-rental-property\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">vacation homes<\/span><\/a><span data-preserver-spaces=\"true\"> or properties in areas where their kids may go to college.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Meanwhile, homebuyers from California and New York <\/span><span data-preserver-spaces=\"true\">who are<\/span><span data-preserver-spaces=\"true\"> moving to other areas like <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/markets?market=Miami-Fort%20Lauderdale-West%20Palm%20Beach%2C%20FL\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Miami<\/span><\/a><span data-preserver-spaces=\"true\"> are finding their dollars go further, says Filippo Incorvaia, CEO at FI Real Estate.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">\u201cThe people who are residents of California, residents of New York, they&#8217;re used to a price point that&#8217;s much higher than South Florida\u2026 and they are coming after selling their properties in California, in New York with much more capital to invest in properties that are much more inexpensive,\u201d he said.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Some builders are taking note of the lack of supply in Florida and building condos and apartments that can <\/span><span data-preserver-spaces=\"true\">be split<\/span><span data-preserver-spaces=\"true\"> into different homes, Incorvaia added. That allows buyers to use part of the property when they want and rent out the other half of the residence as either a <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/guides\/the-ultimate-guide-to-short-term-rental-properties\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">short-term<\/span><\/a><span data-preserver-spaces=\"true\"> or long-term <\/span><span data-preserver-spaces=\"true\">rental<\/span><span data-preserver-spaces=\"true\">.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Should Investors Be Looking at the Luxury Real Estate Market?<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">With prices so high right now, does <\/span><span data-preserver-spaces=\"true\">it still make sense to invest<\/span><span data-preserver-spaces=\"true\"> in the luxury space?<\/span><span data-preserver-spaces=\"true\"> Beauchamp said it depends on what investors <\/span><span data-preserver-spaces=\"true\">are looking for<\/span><span data-preserver-spaces=\"true\"> and where you are based.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Once you know <\/span><span data-preserver-spaces=\"true\">what your goals are<\/span><span data-preserver-spaces=\"true\">, whether it\u2019s for <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/what-is-appreciation-in-real-estate\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">appreciation<\/span><\/a><span data-preserver-spaces=\"true\">, <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/rental-property-cash-flow-analysis\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">cash flow<\/span><\/a><span data-preserver-spaces=\"true\">, or a place to live in, \u201cthen you reverse-engineer what the ideals are,\u201d she said. For example, if you\u2019re looking to purchase a luxury home as a short-term rental, buying in an area that doesn\u2019t permit short-term rentals, like New York City, might not make the most sense.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Other real estate brokers agree that the short-term rental market may <\/span><span data-preserver-spaces=\"true\">be oversaturated<\/span><span data-preserver-spaces=\"true\"> in some popular areas, like downtown Miami.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">\u201cI would not be advising any of my clients to <\/span><span data-preserver-spaces=\"true\">be buying<\/span><span data-preserver-spaces=\"true\"> [short-term rentals] at the moment, at least until things change a little bit, and we see how absorption goes,\u201d says Ivan Chorney with the Ivan and Mike Team at Compass in Florida.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">And while there\u2019s no crystal ball to predict the future of real estate, Mudd thinks it still makes sense to invest in real estate today. \u201cReal estate historically has proven to be a good investment, and we&#8217;ve seen in recent years, in certain markets\u2026 we&#8217;ve seen an incredible surge in home prices,\u201d he added.<\/span><strong><span data-preserver-spaces=\"true\">&nbsp;<\/span><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Final Thoughts<\/span><strong><span data-preserver-spaces=\"true\">&nbsp;<\/span><\/strong><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">In some popular destinations, there are certainly opportunities to <\/span><span data-preserver-spaces=\"true\">be had<\/span><span data-preserver-spaces=\"true\">, as prices are likely to only go up in the next few years.<\/span><span data-preserver-spaces=\"true\">&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">While <\/span><span data-preserver-spaces=\"true\">luxury homes are impacted less by mortgage rates<\/span><span data-preserver-spaces=\"true\">, there\u2019s still a supply issue across both luxury and non-luxury markets.<\/span> <span data-preserver-spaces=\"true\">Most high net worth buyers are more concerned about what\u2019s happening in their stock portfolio than where rates are<\/span><span data-preserver-spaces=\"true\">, said Chorney<\/span><span data-preserver-spaces=\"true\">.<\/span><span data-preserver-spaces=\"true\">&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">\u201cThis massive wealth migration that we&#8217;ve seen, I think, has only just started; I actually think we might be in the second inning,\u201d he said.<\/span><\/p>\n\n\n\n    \n  <div id=\"visibility-group-block_0e6668ae9462bfcb4d9df76939518cc6\" class=\"visibility-group  hidden\">\n        \n\n<div id=\"hero-block_ff0b1a706726405d78b9fb88332d474d\" class=\"first:mt-0 hero-block py-4  alignwide   has-background has-theme-gold-light-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-theme-gold-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Get the Best Loan Today<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:16px\">Find trusted, <em><strong>investor-friendly<\/strong><\/em> lenders who specialize in your strategy. <\/p>\n\n\n\n<p><\/p>\n\n\n\n<div id=button-custom-event-block_35f5cff30e5170f8986d59d0de15df5a class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/business\/finder\/lenders\" x-on:click=\"window.analytics.track(&#039;Blog Block | B2C Marketplace Lender Finder&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/luxury-homes-reach-highest-prices-yet-as-investors-look-for-deals&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-gold-background-color has-text-color has-white-color\" target=\"_blank\">Find a Lender<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\" first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/Marketplace-Blog-Blocks-Lender-v3.png\" alt=\"investor friendly lender, investor friendly real estate loans\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n  <\/div>\n  \n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n    \n  <div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n        \n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<h3 class=\"wp-block-heading my-0 tracking-tight font-extrabold has-theme-slate-dark-color has-text-color has-large-font-size\">Join the community<\/h3>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n\n\n\n<div id=button-custom-event-block_64dd2888dba9e class='button-custom-event'>\n      <a href=\"https:\/\/www.biggerpockets.com\/signup\" x-on:click=\"window.analytics.track(&#039;Blog Block | Acquisition | Free Membership Signup&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/luxury-homes-reach-highest-prices-yet-as-investors-look-for-deals&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Sign Up<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n            <\/div>\n<\/div>\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n  <\/div>\n  <\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Luxury home prices have made these properties even more unaffordable, but we talked to investors who told us what to look for.<\/p>\n","protected":false},"author":613681,"featured_media":175011,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7381,7119],"tags":[],"class_list":["post-175014","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-housing-prices","category-biggerpockets-daily"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/175014","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613681"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=175014"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/175014\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/175011"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=175014"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=175014"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=175014"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}