Luxury Market and Luxury Goods Remain Strong and Continue to Sell Big

Luxury Market and Luxury Goods Remain Strong and Continue to Sell Big

  • ROCO Luxury Homes
  • 02/2/23

The real estate market across the country has seen a slowdown in buyer demand and median prices. However, the luxury market hasn’t been impacted in the same way. This is partially because the factors influencing the general housing market don’t affect the luxury market as significantly. Thus, demand will persist with a few changes unique to 2023. Here’s what to expect when searching for luxury Arcadia real estate or other incredible areas of Phoenix and Scottsdale.

Economic factors

Luxury buyers and sellers in 2022 were protected from the strong swings in the housing market. Although sales have slowed, prices still remain high in most luxury markets. As with most housing scenes that are exiting the hot sellers’ market of 2020 and 2021, slowing trends indicate a return to more normal conditions. A significant factor impacting sales in 2022 was the level of inventory. Buyer demand was severely held back by insufficient inventory.

Another factor that impacted sales in 2022 was the rising mortgage interest rates. While many luxury buyers weren’t as impacted by interest rates, many sellers still chose not to list their homes on the market, as they wanted to keep their low rates locked in. Fewer new listings only exacerbated the already low inventory levels. The stock market also impacted luxury buyers, as many investors waited for stability after drastic market corrections. Lastly, inflation and economic uncertainties made buyers and sellers cautious when considering home values.

Even with the obstacles of 2022, luxury real estate remains a valuable investment with the promise of a bright future. Many buyers see an opportunity in slower market trends, searching for properties with competitive pricing and less pressure. Buying properties in cash has also become a popular way to sidestep mortgage rates. Home values will likely keep rising, making luxury estates great long-term investments.

The luxury real estate market

The luxury market for single-family homes in Phoenix remains skewed in sellers’ favor. For example, within Arcadia real estate, homes continue to command high price points, with the median sales price reaching $1.31 million year-to-date as of December 2022. This is a 14.9% rise over the previous year. Within all of Phoenix, the median sales price year-to-date as of December 2022 was $460,000, which is also 15% higher than the year prior. Single-family Scottsdale homes have experienced similar price increases, reaching a median sales price of $1.025 million as of December 2022 — an 18.2% increase over 2021.

Areas like North Scottsdale and Paradise Valley are especially popular with luxury buyers, as these communities provide access to top shopping boutiques, upscale dining destinations, entertainment spots, and gorgeous mountain views.

Luxury home buyers and sellers should team up with a knowledgeable local luxury agent who is well-versed in the high-end housing scene and all that the area has to offer. Your agent will be “in-the-know” on luxury market trends and can help you predict where the market may be heading. With this information in focus, agents can help buyers and sellers negotiate the best home transaction and work toward their goals.

2023 luxury market trends

According to the National Association of Realtors, there are a few trends to look out for in 2023 luxury real estate. Surprisingly, “super-sized” homes may decrease in popularity. As the economy and society reopen, work and leisure are no longer confined to the home. This is reflected in luxury purchases. Because of this, smaller luxury properties sold 19% faster than larger estates throughout 2022. A smaller property may also be more manageable when making a cash offer, as the upfront costs tend to be less of a shock.

Now that the housing frenzy of 2020 and 2021 is over, some buyers may be experiencing buyer’s remorse after a stressful homebuying experience. This may generate higher sales, especially with more favorable market conditions in select areas. Buyers on an international scale are also starting to re-enter the United States. Americans are eying global real estate as well.

Another trend that will boost luxury sales is the belief in real estate as a secure, financially stable investment, especially in areas that are traditionally luxurious and highly sought-after. As interest rates remain high, cash deals will continue to be the norm, with cash sales making up 26% of luxury real estate purchases in late 2022. Luxury buyers also use margin loans, stock portfolio loans, and private bank loans to finance investments.

Luxury goods are going strong

Despite inflation, the demand for luxury goods is on the rise. In fact, the global luxury goods market is projected to increase at a compound annual growth rate of 3.7% from 2022 to 2027. This is largely due to an increasing Millennial and Gen Z presence, as well as rising online sales. Between 2023 and 2024, the personal luxury market in the United States is expected to grow by 3 to 8%.

Major designer brands, like Dior, Louis Vuitton, and Chanel, will continue attracting buyers more than smaller designers. A major force for this in 2023 will be luxury brands taking over their own resale markets. Accessories, in particular, will do better than clothing items. As most consumers start favoring simplistic designs, luxury brands will have to pivot to provide.

2023 luxury good trends

Buyers can expect a few changes in the luxury goods industry in 2023. For one, many prestigious luxury brands will move further into online spaces. This caters to savvy buyers who expect to shop for their favorite items wherever and whenever they choose. In an interesting sidestep, renting out luxury products may rise in popularity. This provides more flexibility for consumers.

This doesn’t mean that in-store spaces are a thing of the past, however. Many stores may actually enhance a customer’s experience via additions of AR and VR technology. Trends towards eco-consciousness are making a niche for themselves in the luxury market as well. More goods will provide eco-friendly options for consumers. These include animal-free leathers and lab-grown diamonds.

Simply investing in luxury goods will also become easier for consumers. With new technology, it’s easier than ever to identify fake goods. This is particularly useful for buyers who invest in luxury goods rather than sectors like the stock market or real estate. It may also become possible to own shares of luxury goods.

Ready to buy luxury?

Although the housing market is slower than in recent years, there’s still a high level of consistent demand for luxury real estate. This is reflected in high prices and low inventory. Demand for luxury goods has followed suit. Rising trends have been impacted by factors like easy accessibility through online channels.

That said, the luxury Arcadia real estate market and other gorgeous locales in the Phoenix and Scottsdale areas can be challenging to break into without the help of professional agents on your side. Reach out to the team at ROCO Luxury Homes for top-tier guidance you can count on. They will get you where you want to go.

*Header photo courtesy of ROCO Luxury Homes

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