Looking at Luxury Locally and Nationally
April 1, 2022
Laura Kelly Mance
CRB, REALTOR® / President
We all know that the luxury markets in the Tucson and Phoenix metro areas last year broke records. In Tucson we closed 895 residential sales over $800,000, which was up from 426 in 2020 and 282 in 2019. In the Phoenix area there were 9,795 closings, up from 5,472 in 2020 and 3,729 in 2019. Yes, luxury buyers were out there, but who are they, where are they coming from, and what are they looking for?
Let’s look at national and international trends in luxury. Luxury Portfolio International recently published their 2022 State of Luxury Real Estate (SOLRE) white paper. I encourage you to find and read the full report which includes their survey and results, consumer mindset, the market for luxury real estate 2022 and Buyer trends in 2022. It is a wealth of detailed information.
To summarize, they conclude that while the market has normalized somewhat, there are still more Buyers than listings in all price ranges and that includes luxury. This year Sellers will find it difficult to resist the opportunity to sell at or near the top value and no one seems certain the demand at this level will last. Nothing lasts forever in real estate. Buyers who haven’t been worn out by this process are still compelled to look and the fear of missing out (FOMO) is pushing pricing beyond the norm.
What are Buyers looking for? According to LPI its “location, quality, and well-run cities and towns. Remote work and the accompanying frustration and stress of being in the home a lot continues to play a significant role in the purchase decision process.” The survey also concludes that sustainability has become a more prominent feature and consumers expect to pay a premium for those features and amenities. The top trend in luxury real estate in 2021 was finding a home that allowed for working from home. According to LPI 27% of luxury home buyers call that a “significant concern.”
What does this mean for the brokerages who include luxury listings and sales in their repertoire? Out of state/country Buyers aren’t afraid to buy sight unseen anymore and that means the brokerages must have the technology to support the discerning online shopper. Videos, virtual tours, 3-dimensional interior and exterior floorplans are a must if brokers want to attract the national and international shoppers. That level of technology doesn’t come cheap so larger brands or brokers willing to collaborate may gain the advantage.
The LPI information mirrors what we’re seeing locally but where Buyers are coming from will vary state by state. In the Tucson metro area, we survey all our agents after luxury closings to determine what the common themes are. With over 50% of the luxury market share we’re able to get a pretty good picture. In 2021, 39% of the Buyers came from Arizona, 12% from California, 9% Washington, 7.4% from Colorado and 4.1% from Illinois. That only leaves 28% coming from other states or nations. For 71% it was a primary home purchase and for 29% a second or third home. The number 1 reason for moving here was quality of life with 45% followed by 22% for retirement. We’re not just a retirement state anymore.
There is nothing in the local or national data I’ve seen that would indicate this market is going to slow down anytime soon. Sellers who resisted becoming Sellers last year are finding it harder to ignore economic motivators and inventory is picking up. That fact will encourage prospective Buyers to hang in there and keep looking. If luxury is your niche, you should have a busy year. If not, concentrate on what you do well or gain those skills. The luxury client demands an agent who understands the market, the value of luxury amenities and who has an excellent network of peers so they won’t miss any opportunities.
Laura Kelly Mance, CRB
President, Long Realty Company