The luxury housing market and experts predictions for its future
Published Date: August 23, 2023
Gain insights from industry experts on the latest in luxury residential, trends, and predictions for what’s to come in real estate, in Pacaso's recent webinar hosted by co-founder and former Zillow CEO Spencer Rascoff.The discussion featured insights from experts in luxury residential real estate, proptech, housing, and venture capital industries, including Ryan Serhant, Founder and CEO of SERHANT, John Burns, CEO John Burns Research and Consulting, Billy Rose, Co-Founder of The Agency.The discussion covered a range of topics, including key takeaways such as:
New inventory is more valuable than ever before
Limited housing supply has resulted in fewer options for both buyers and sellers. Many potential buyers are waiting for new properties to be listed. The scarcity of available homes is a key factor in maintaining high property prices. This situation has led to a significant decrease in housing affordability, reaching a 37- year-low. One potential solution to address this issue is to introduce new housing supply, including in the luxury market. Home builders are currently benefiting from these conditions, as evidenced by increased home prices and doubled mortgage rates. This trend is further highlighted by the notable investment of Warren Buffet into home builders, marking his first-time involvement in this sector.
Marry the house, date the rate
The advice given to buyers is not to anticipate a decline in property prices, but rather to be prepared for a potential decrease in available properties and an increase in monthly payments. If buying is preferred, there's a saying in the real estate industry to prioritize the property itself over the current interest rate. A home is an extension of our identity, and even though mortgage rates have reached a 20-year peak, experts urge buyers to remember that a home represents a lasting investment. Regarding affordability, considering alternatives to traditional buying is also a viable solution. The once-cherished aspiration of owning a vacation home in different markets has been disrupted by these exorbitant interest rates. Co-ownership stands out as a clever approach. Comparatively, a buyer's monthly mortgage payment for owning a Pacaso property could be nearly 50% lower than that of an average home in sought-after markets such as Vail or Tahoe.
YOLO mentality and cautious optimism
Certain buyers approach real estate with a YOLO mindset. The message from housing experts is clear: why wait? Enjoy skiing in Vail while your knees will still cooperate. Significantly, Pacaso's revenue saw a 51% increase from Q1 to Q2, indicating a continued interest from buyers who are actively making purchases.This mindset encourages embracing the present, whether for second homes or primary residences. The short-term outlook remains somewhat uncertain due to fluctuating rates, historically low inventory, and affordability challenges. Nevertheless, a catastrophic crash is not anticipated. Whether renting or owning, for primary or secondary homes, everyone is connected to real estate in some capacity, ensuring a continued cycle of buying and selling.Experts hold a positive yet cautious optimism for the long-term prospects of the luxury housing market.