What is luxury real estate?
Luxury real estate is a difficult label to pin down because its standards can change depending on the market. What may be considered luxury in a Midwest town may not meet the local standards of luxury for a West Coast city. Typically, though, the luxury real estate market encompasses the top 5% to 10% of listings in a specific area. In large metro areas, high-end properties can be expected to list at $1 million or more. Major cities like New York have an even higher standard, beginning at around $4 million. The property’s location, amenities and design all factor into the price point for that area. A property may be marketed as having one or two luxury amenities, but that doesn’t mean it’s worth a luxury price tag. Look at the property as a whole to assess its worth.And, of course, it’s important to be aware of luxury real estate trends if you’re looking to break into this housing market.1. Luxury houses are selling fast

2. Luxury home sizes vary across regions

3. The luxury real estate market is hottest in the South

4. Luxury home prices are increasing

5. Luxury second home ownership is on the rise

6. The luxury housing market is less affected by the housing shortage

7. Desired luxury home amenities are changing

How to buy a luxury home in 2022

Know your budget
If you aren’t buying in cash, you might need a jumbo loan to finance your luxury home. These require great credit scores and debt-to-income ratios under 43%. The down payment will vary based on your specific history, but save at least 20% of your target purchase price. You will also need a considerable amount of cash on hand to prove you can cover monthly payments.Rank your priorities
Know what amenities you want before you start looking. Distinguish between “must-have” and “nice-to-have” amenities. This will provide direction to your home search and prevent your expectations from inflating with every house you see.Research the local market
Local real estate markets can be drastically different from the national trends. Find out if property values in the area are increasing or decreasing. How will property taxes affect your budget?Don’t trust the photos
A luxury property listing will likely showcase gorgeous photos, including drone photography and videos. This can make the house look much larger than it seems when you’re inside. On the flip side, some houses don’t photograph well and look bland in two dimensions. Wait until you see the house in person before making a final decision.Get to know the neighborhood
Research attributes that are local to the area as they may impact your initial impression of the property. Nearby parks could make up for a small yard. A five-star fitness club may be a great alternative to a home gym.Document everything
Due diligence is a virtue, not a curse. Taking the previous owner at their word will not go far when you find out your new purchase was not as advertised. Back up any claims or promises from the homeowner in writing before closing on the property.Think about resale value
A home is only worth what someone is willing to pay for it, and having the most expensive house in the area may work against you. Investing in luxury amenities could make it harder to find a buyer in the future. High-maintenance landscaping and a pool may seem like more work than pleasure to someone else.Be patient
A person usually needs to stay in their home for five years to not lose money on the transaction costs. Wait until you find a home that you’re confident you’ll be happy in before rushing to make an offer. There are fewer options in the luxury real estate market, both in the number of houses and potential buyers. The luxury real estate market has seen impressive changes over the last few years. If you’re looking to buy your first or second luxury home, use these insights to inform your decision. You’ll have the home that’s right for you now and for years into the future.