5 trends in luxury real estate: What to expect in 2021
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Many industries experienced disruptions in 2020, but real estate not only weathered the storm, it thrived. According to Zillow data, homes at all price points were selling faster and above list price in the fall, defying seasonal norms, and Zillow predicts the rate of home sales will only accelerate in 2021. Within this hot housing market, what can we expect from the luxury segment? In a Forbes interview, Alam Khan, the president of Luxury Portfolio International, identified five luxury real estate trends to look for in 2021.
Covid-19 will continue to affect buying decisions
The coronavirus pandemic has, in part, contributed to the demand for high-end homes. For some buyers, owning a luxury home away from congested city centers provides a sense of security and escape. Khan predicts that even with widespread vaccine availability on the horizon, this desire for safety and comfort will continue well into 2021.
Remote work will enable more time at second homes
The shift to remote work in 2020 led some employees to reconsider their living arrangements. Why stay in a small apartment in the city if commuting distance is no longer relevant? For those with the option to purchase a second home, remote work has provided an opportunity to enjoy a more comfortable or spacious setting in a location of their choice. Redfin identified the migration of city dwellers to resort towns as one of the noteworthy pandemic-influenced real estate trends of 2020. Khan believes people who’ve taken up residence at their second home will not be eager to return to their city dwellings, and instead will be likely to maintain co-primary homes or even swap primary residences, spending more of their time in the second home for the next year or so.
Second home sales will remain strong
The current housing boom hasn’t been limited to primary residences — a Redfin analysis found that demand for second homes was up 100% year-over-year in October 2020. Khan foresees a continued interest in second home purchases in 2021, with several factors contributing to this luxury real estate trend, including the flexibility of remote work and schooling, a strong stock market and record-low mortgage rates.
Big cities will recover in the long run
While the next year or two may see only a gradual return to pre-pandemic life, Khan thinks cities will eventually recover. True “city people” who’ve temporarily moved to less crowded locations will find themselves drawn back to urban centers — and the social and cultural perks they offer — once Covid-19 concerns have faded. In addition, remote employment options may become less flexible as the pandemic lifts, requiring a return to office buildings. This reverse migration might revitalize a luxury real estate trend of the past: the purchase of high-end condos in the trendiest urban neighborhoods.
Consumers will prioritize a sense of security
With the pandemic far from over, safety remains a top concern for many families. And for affluent consumers, this concern impacts their housing choices, which, in turn, continues to influence luxury real estate trends. Khan believes this segment sees real estate as a way to provide their families with the safety and security they seek, and they want a home that can comfortably accommodate all their needs throughout 2021, including work, school and social life.
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Second home prices up nearly 20%, buyers flock to drive destinations