It looks like it will be a big year for luxury real estate.
Despite record interest rate hikes, wealthy homebuyers will continue to snap up high-end properties over the coming 12 months, according to the new 2023 Luxury Outlook Report from Sotheby’s International Realty.
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“Buyers and sellers are once again maneuvering an ever-changing and fast-moving real estate market,” Sotheby’s International Realty’s chief marketing officer Bradley Nelson said in a statement.
The report, which is based on the insights of industry experts and Sotheby’s agents representing homes worth $10 million or more, outlines the expected trends of 2023 to help affluent buyers better navigate the market.
First and foremost, there will be even more well-heeled buyers in the mix. With global wealth expected to soar over the next several years, there will be an influx of high-net-worth buyers in the various markets across the globe.
At the same time, there will be a drop in the number of multimillion-dollar properties on offer. In fact, more than 60 percent of Sotheby’s agents said inventory is low or very low in their regions. This is due to the fact that many sellers are choosing not to offload property and take on new, higher mortgages. The intergenerational transfer of wealth is also impacting inventory; a lot of second-home properties that were given to heirs are not coming onto the market, according to the report.
In addition, the report indicates there will be a boom in international sales. As the pandemic restrictions ease and the US dollar strengthens, more Americans will look to flex their buying power further afield. Last year, approximately 40 percent of Sotheby’s sales in Mexico City were to foreign buyers; this year, the agents predict the number will grow to 60 percent. The percentage of high-end American buyers in Italy also increased from five percent to 13 percent between 2021 and 2022 alone.
Another key finding is that cash will once again be king. As interest rates have more than doubled over the past year, buyers are now turning back to cash for transactions.
As for what big spenders are seeking, the most essential amenities for today’s luxury buyers include salt-water swimming pools, water purification systems, EV charging stations and floor-to-ceiling windows.