The Coldwell Banker Global Luxury Report; a summary of our current luxury residential landscape: resiliency, adaptability, contradiction, transition, adjustment, resetting. Declarations of 2023 as a year of correction by some in the media may prove to be the most apt description of where the real estate market sits presently. But only time will tell if this title holds against the tides of reality. Expectations have shifted more recently, with all eyes on the spring to post a strong showing for luxury real estate after a momentary pause in 2022.
Paradoxes abound in our market. Conditions are improving for buyers this year, but it’s not a buyer’s market yet- at least not everywhere. Median prices for luxury single-family homes are up in some places, like Seattle, and trending down in others, like Phoenix. Inventory is up overall, but new inventory continues to lag. Even on the wealth side, the metrics don’t paint a consistent picture. These contradictions have sowed confusion and allowed housing market misconceptions to take root, which is something The Report 2023 seeks to dispel.
This year’s report, published by the Coldwell Banker Global Luxury® program, curates the latest luxury real estate insider intelligence and forecasted market trends from the Institute for Luxury Home Marketing, Wealth-X, Coldwell Banker Global Luxury Property Specialists and other wealth experts.
New to The Report this year is the agent vision survey, which polled over 600 Luxury Property Specialists around the globe on topics ranging from market conditions to the latest in marketing tactics and the most desired home features and amenities among their high-net-worth clients. – Michael Altneu
What’s Happening in Northern Michigan?
Last year, in 2022, there were 67 luxury sales in Emmet County. 75% of these luxury sales were cash sales and nearly 40% of those sales closed within 30 days or less.
Luxury reports indicate that sales were down from 2021 when they were at an all time MLS high of 75 sales in Emmet County (64% were cash sales). (Data provided by the Northern Michigan MLS and interpreted by Coldwell Banker Fairbairn Realty).
The highest price home ever sold in Northern Michigan’s Emmet County was sold in Harbor Springs at $10,750,000. At 12,000 square foot, this 4 bedroom, 8 bath home had 330 ft of water frontage on Lake Michigan within walking distance to downtown Harbor Springs. Features had included in-floor heat, geothermal, a 3 car heated garage, professional landscaping, outdoor fireplace & flagstone patio, and gardens overlooking Lake Michigan. The home spent 200 days on market and sold in January of 2017.
At this point in 2023, there have been 7 luxury sales in Emmet County, primarily in Harbor Springs and Petoskey. The total sales volume has been $15,035,000 so far with an average time spent of market of 79 days. Sold pricing ranges from $1,075,000 to $2,147,857.
In Emmet County, sales took off in the 3rd quarter of 2022, which is typical of our market. It was in the 3rd quarter that the highest sale prices occurred with an average luxury sale price of $2,455,596 and the highest sales price of 2022 at $6,500,000.
This $6.5 million dollar home was located in Bay Harbor with 6,444 sq. ft. 4 bedrooms, 5 bathrooms, a 3 car garage, and 150 waterfront feet of Lake Michigan.
Want to know what’s driving affluent consumer buying and selling decisions in 2023?
The secondary-home market is not a niche sector anymore, especially in Northern Michigan. In a sign of the secondary-home market’s solid footing, nearly half of all individuals with $5 million+ in net worth now own three or more homes. If the U.S. stays on its current trajectory and the population of high-net-worth individuals grows over the next several years as forecasted by Wealth-X, this number could be much larger in the future. This means more luxury buyers will likely enter the scene in search of their next vacation spot or an extra source of income- something Emmet County has been experiencing for awhile now.
In the early days of the pandemic, there was a notable shift to premium resort/recreation markets. Then, as affordability shrank and inventory levels deteriorated, some buyers shifted their focus to adjacent locations. Meanwhile, large cities, initially hit hard by the pandemic and then rebounded, got help from locals who capitalized on the opportunity to snap up a secondary income-producing property when prices were low.
In 2023, the expectation is that a mix of premium and more affordable secondary-home markets, as well as some resort and urban locations, will hold their own. We could also see modest price growth in some of these locations if inventory remains tight and small price drops in others, which could give weary buyers a chance to return to their dreams of escape or pursue their goals for long-term financial security.
The prevalence of remote work and the desire to create memories and experiences with those they love, has created “a new normal” for secondary homes among the affluent.
What’s driving high-net-wealth clients?
The Coldwell Banker Global Luxury division asked over 600 Luxury Property Specialists what’s top of mind for their clients this year. What are the latest high-end buying trends, what’s most-wanted when it comes to home amenities, what defines a dream home today, and what tech amenities do they think have the most value today? This list explores everything from what’s currently shaping clients’ real estate decisions (lifestyle changes still win the day) to the qualities clients most want in a luxury real estate professional (integrity and credibility).
Top Luxury Report Trends
Property Types in High Demand
- Properties based on location
- Move-in ready homes
- Properties with acreage or land
New Buying Trends
- Land for building dream homes
- Homes in need of renovation
- Fully finished homes from linens to cutlery
Top Qualities of a Dream Home
- Construction materials
Must-Have Home Amenities
- Indoor-outdoor living spaces
- Chef’s kitchen with the latest features
- Breathtaking views
Most Valuable Tech Amenities
- Home automation systems
- Smart, energy-efficient appliances
- EV charging stations
Design Trends with Staying Power
- Open floor plan
- Bespoke architectural elements
- Neutral color palettes
- A housing market correction appears to be underway. After three years and 40% price increases in the luxury home sector, uncertainty took root after the Federal Reserve started hiking interest rates in March 2022 to curb inflation. The market appears to now be normalizing to pre-pandemic levels.
- Seasonality came back in 2022, but with a twist. Inventory, sales, and prices all rose in the second quarter only to stall in the third and fourth quarters, as the market reacted to outside influences. Expectations are that the spring market will return in 2023.
- Behavioral gaps between wealth demographics widen. High-Net-Worth (HNW) individuals are expected to shift focus to conscious spending and futureproofing, while Ultra-High-Net-Worth (UHNW) individuals will continue to live for the moment and prioritize personal enjoyment.
- Agent outlook remains upbeat. Over half of Luxury Property Specialists surveyed
said they expect 2023 luxury home prices to remain flat or up slightly from 2022.
Over half said they expect demand to remain consistent throughout 2023, while
nearly 30% said they thought demand could be stronger by the end of the year.
- What defines a dream home in 2023. Most Luxury Property Specialists said that
indoor-outdoor living spaces, a chef’s kitchen with up-to-date appliances, and a
home with a breathtaking view are their clients’ top must-have home amenities.
Meanwhile, 40% said that their clients define a dream home by its views and
36% said the quality of construction or materials.
- Secondary homes become mainstays. The percentage of those with a net worth
of 5 million+ who own two or more properties increased from 70% in 2021 to
79% in 2022, per Wealth-X. Among those, nearly 15% of all wealth is put toward
real estate and other luxury assets.
- Top spring buying and selling opportunities. An analysis of 125 U.S.
metropolitans revealed the top 10 opportunity markets for buyers and sellers
this spring. St. Louis led the list for sellers while Marco Island, Florida has grown
friendlier to buyers.
- The Top 20% continue to lead luxury. An analysis of 10 prime U.S. markets from
New York to Los Angeles reveals that the wealthiest spenders carry an outsized
influence in the high-end residential sector.
- Wealth centers shift worldwide. New York is the No. 1 city for primary residents
and secondary-home owners with a $5 million+ net worth, but Singapore
jumped into the Top 10 in 2022, taking the No. 4 and no. 7 positions,
respectively. Now that China has lifted its COVID-19 travel restrictions, experts
also predict increased movement in that part of the world.
- Secondary-home ownership makes a comeback. Borders have opened up, and
with it, has come increased global travel and a growing affinity for property
ownership in foreign countries among HNW individuals. Their reasons for looking
beyond their home country range from economic to political and financial, but
their penchant for exclusivity and adventure plays a key role.
Coldwell Banker Global Luxury® is recognized as a world leader in the marketing of exceptional properties and is widely considered to be among the world’s consummate marketing programs for successfully promoting luxury properties to a local, national and international marketplace.