For the first time, in a long time, those in the market for luxury homes may have to settle for a less-than-ideal home. This is the result of the fact that COVID has caused the inventory of homes in all price ranges to decrease dramatically, and the fact that the reduced inventory has driven prices so high that some wealthy individuals have been priced out of the luxury housing market.
Of course, this doesn’t mean all is lost, a savvy person in the market for a luxury home would do well to purchase a “lower-tier” luxury home and leverage the already hyper competitive housing market to climb up the so-called ladder. At a bare minimum, this home will give you a physical presence in a given market and will appreciate along with all the other local properties. Eventually, your investment will allow you to trade up.
As most of you are aware, single-family residence values have skyrocketed over the last few years and are likely to continue doing so; especially in homes that prioritize the right stuff (privacy square footage, extra rooms for offices). Luckily, condos have briefly stalled as inventory increased; this represents an opportunity for luxury market buyers to get a toe hold in the market, and likely realize decent profit (once condo inventory is scooped up, prices will increase again).
Finally, having a residence in a competitive marketplace you ahead of out-of-town folk when it’s time to come to the table and make a deal; most sellers understand that it’s safer to sell to someone who is physically present, rather than taking virtual tours and conducting all of their business over the phone (a higher percentage of “remote” deals fall apart); sellers are beginning to disfavor remote transactions.
Ultimately, if you’re in the market for luxury homes at the moment, it may be in your best interest to get a foothold in the community first. This means purchasing an investment home, of sorts, near the area you’re looking to buy your mega mansion. The benefits are significant, and the risk is low.
At the Chernov Team we understand that knowledge is power and knowledge of how to increase your chances of success in the luxury home market is powerful knowledge indeed. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.