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ore than two years removed from the upheaval of the pandemic, the luxury real estate market is at an inflection point. After a record- setting performance in 2021 and a strong – in many cases record-setting – first half of 2022, sales activity is gradually returning to what many would consider normal levels. Within this setting, three notable trends we’ve been tracking at @properties Christie’s International Real Estate were gaining momentum at mid-year and are shaping the luxury market narrative even further this fall. HARD ASSETS AS A SAFE HAVEN Amid high inflation, rising interest rates, and increased volatility in equity markets, consumers are increasingly looking to hard assets, notably real estate, to stabilize their wealth portfolios. Residential real estate is often a relatively strong performer in an inflationary environment, and sales in the first half of the year provided further evidence that real property can be a valuable hedge. BLUE-CHIP MARKET HEATS UP Even the most secure consumers tend to pause big-ticket purchases like luxury homes during uncertain economic times. However, a combination of factors are making a widespread pullback in the luxury real estate market highly unlikely. Rather, wealthy buyers are putting a premium on blue- chip markets and properties, banking on predictable, long-term growth opportunities. This has played out in Chicagoland throughout 2022 with sales of super- luxury homes in the $4 million-and-up category on pace to eclipse 2021’s record 101 sales. And according to Crain’s Chicago Business , more homes in the area have sold above $10 million this year than in any other year besides 2018. THE HUNT FOR RELATIVE VALUE
Of course, blue-chip properties are priced accordingly, and those figures have skyrocketed in the past two years. That has driven buyers to look for alternatives in other locations – a trend that will continue with interest rates impacting housing affordability – even in the luxury market. In cities, suburbs, and second-home markets, buyers have shown a willingness to go farther, take on a remodeling project, or otherwise seek conditions (such as low-tax/no tax states) in search of value. For more on these trends and how they’re impacting the luxury market not only in the Midwest but nationally and internationally, check out the Christie’s International Real Estate Luxury Trends Report.
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