June 27th, 2020
There are some interesting global affluent buyer trends going on right now in the real estate market as reported in an article I read today and I wondered if those trends translate over to the Palos Verdes Luxury Homes market.
Let’s review what those global affluent buyer trends are.
- 40% of the world’s high net worth individuals are ready to buy a home in the next three years
- 23% of the world’s high net worth individuals are are looking to sell a home within that same time frame.
That looks like a supply/demand imbalance that will bake in price appreciation for luxury homes but again, will that translate over to Palos Verdes Luxury Homes?
Of little consequence to us here in the Palos Verdes communities, the biggest imbalance charted was for the Middle East in which 71% of high net worth individuals are looking to buy in the next 3 years. What about the North America regions? What’s the supply/demand imbalance here or is there any? The numbers aren’t so strongly leaning in the sellers favor. In North America, 30% of high net worth individuals are looking to buy where as 25% are looking to sell; a slight lean in favor of a continued sellers’ market.
Are there any changes in the percentages over the last 3 years? The report states …
“The number of high-net-worth buyers (38%) and sellers (23%) is similar to 2016 levels. Last year, buyers hovered at 32 percent while sellers stood at 26 percent, according to the report. The “mismatch in purchase intent” this year will result in higher prices, less inventory and a hesitation by sellers as they try to find new homes in markets such as San Francisco, Hong Kong and beyond, according to the report, written in conjunction with research partner YouGov. Luxury Portfolio International is the luxury arm of Leading Real Estate Companies of the World, which represents 565 independent brokerages around the world.”
What’s going on here in my opinion is the increasing wealth as we see the economy improving. Sure, interest rates are rising so financed deals are more expensive “today” than 2 years ago; however, the reason for rising interest rates is a significantly growing economy here in these United States. In fact in the most recent Credit Suisse Global Wealth Report there’s a 7% increase in the net gain in the high net worth population. As this segment of the population experiences growing wealth, a natural outlet for this wealth is the relative safety in the purchase of real estate, especially real estate in These United States of America.
It doesn’t hurt sales to understand that the perception of one’s house as a “home” and not just sticks and bricks especially when it comes to showcasing wealth, dominates the mind set of the high net worth individual. The Luxury Portfolio Report clearly shows this to be true as seen by the pie chart on the left.
But what of the Palos Verdes Luxury Homes market?
Given the rate at which Palos Verdes Luxury Homes sold in the last year, there is now 439 days (almost 15 months) of unsold inventory for homes listed over $3,000,000. This begs the question if you’re an astute homeowner thinking of selling. You’re going to have to ask your self, “What price do I have to set on my home to make it one of the next few that sell instead of one of the Palos Verdes Luxury Homes that sell 15 months from now all shopworn, picked over and rejected by buyers for over a year?”
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Palos Verdes Luxury Homes Over $3,000,000 Now For Sale
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