The Covid-19 pandemic is changing the landscape for luxury real estate. But will these changes be temporary, or are they a glimpse into the future of the luxury market?
When the U.S. economies started to shut down, the real estate market slowed down considerably. All areas of the market are not affected in the same way, and luxury is particularly different from all other price points. When economies reopen, the luxury market may not bounce back to the old normal, but look quite different.
SEMI-REMOTE IS THE NEW LUXURY HOT SPOT
Between mid-March and mid-April, the number of U.S. listings over $1 million dropped 1 percent, compared to a rise of 28% the year before. Comparatively, the number of listings for homes at every other price point increased over the same time period.
While luxury is impacted overall, the degree varies greatly on the market and location. Demand for semi-remote luxury properties is up, while demand in densely populated centers is down. While metropolitan centers have been hubs for luxury real estate in the past, right now densely populated centers are the last places people want to live in. Big cities across the eastern seaboard have been particularly hit by the pandemic, and they no longer feel like safe and desirable places to live.
People want more space, but that doesn’t mean they’re looking to live completely remotely. The prime spots seem to be between remote and city-living—homes that have access to schools, restaurants, communities, and culture, but space to breathe and private outdoors. People want to be able to see others again, so access to socialization is a big draw. Suburbs and gated-communities may see a resurgence in interest.
Real estate agents in the Hamptons are seeing a lot of demand, while Brooklyn is languishing. Condos in Miami may also do poorly, while semi-remote in Florida stays strong. People want to get out of the city. Being cooped up may lead people to want to move elsewhere and see green when they look out of their windows. And when economies reopen and social distancing changes, people will want to live in spots that are comfortable if there is another stay-at-home order.
Location is not the only change in luxury demand. People are also looking for amenity-rich housing that accommodates a stay-at-home lifestyle and decreases the spread of contagions. There has been an increase of interest in touchless appliances, and copper finishes, as copper can be an antimicrobial surface.
There is also interest in high-end kitchens, home gyms and entertainment rooms, and enough space for working remotely. Multiple home-offices will make a property stand out. While stay-at-home orders are temporary, the shift to more remote-working may be permanent. If companies keep remote-work capabilities, it will give more flexibility to jobs and relocation possibilities.
The pandemic has shifted how people think about their homes and what they want out of properties. We don’t know how long these changes will last, but it is certainly possible that they won’t change immediately when economies reopen. Some are making comparisons to how real estate was affected after 9/11 and Hurricane Katrina. There were huge relocations, and many of those people didn’t come back. We might see the same thing from metropolitan centers.
Access to remote buying and selling of real estate is only increasing. More people may be looking for luxury properties out-of-state and farther afield. For now, the demand is for semi-remote and amenity-rich luxury properties.