In a shifting real estate market, the guidance and expertise that Inman imparts are never more valuable. Whether at our events, or with our daily news coverage and how-to journalism, we’re here to help you build your business, adopt the right tools — and make money. Join us in person in Las Vegas at Connect, and utilize your Select subscription for all the information you need to make the right decisions. When the waters get choppy, trust Inman to help you navigate.
The official start to summer is just around the bend, and luxury agents are already seeing some clear trends emerge as the temperatures rise.
A slight slow down and signs of normalization have impacted the housing market at large and the luxury sector alike, but luxury agents still have plenty of clients — all with their own specific needs — to attend to.
Agents said those needs this summer include more things — and grander things — at home. Even while clients’ appetites in their homes have risen with the temperatures, luxury clients are slowing down a bit and making more measured moves. But that doesn’t mean they’re stopping altogether.
From fully furnished homes to taking more time with their home sale or purchase, these are the biggest trends to emerge in the luxury sector for summer 2022.
Fully outfitted homes
In a number of markets across the country, Stan Ponte, of Sotheby’s International Realty in New York City, said that he’s seeing buyers purchase homes fully furnished and then also making offers on a variety of other things that might appeal to them in the home.
“What we’ve been seeing, especially at the ultra-luxury level, is buyers literally buying everything,” Ponte said. “The furniture, the china, the curtains, the television on the wall, everything. So essentially, there’s a bit of a trend towards a turnkey purchase, where the old phrase used to be, ‘Just bring your toothbrush,’ and I think there’s a little bit of that.”
Sellers aren’t necessarily offering everything in the home from the get-go, Ponte explained, but more and more buyers are accounting for extras in the home with their offer price. And people who move during the summer are often on a tighter timeline due to school schedules or job offers, so they’re more likely to entertain these types of all-inclusive offers, because they make moving quickly a whole lot easier.
“If you’re being relocated from a house outside of Houston to live in an apartment in New York City, then it’s more likely that your house outside of Houston has furniture that may not match … or fit in the apartment,” Ponte said. “[And] this is not just a New York City phenomenon. This is happening across all of our Sotheby’s International Realty markets all over the country.”
One thing Ponte clarified that is not typically wrapped up in these all-inclusive offers is artwork, which can be priceless to the beholder.
“Of course, this always excludes artwork and sometimes it excludes a light fixture or a family heirloom or something like that,” Ponte said.
Tiffany Curry, of Tiffany Curry & Co. Realtors at Berkshire Hathaway HomeServices in Houston, said that her millennial luxury buyers are investing in artwork and curating clean white spaces in their homes to display them. According to a 2021 report from Art Basel and UBS, millennial art collectors were the biggest spenders of fine art in 2020, with 30 percent having spent over $1 million on art.
“So now we’re starting to see that effect, to where they want nice clean bases so that they can hang their art,” Curry told Inman. “So now they’re investing in art rather than just the stock market. So they are being a lot more creative with their money. So in addition to tech and cryptocurrency and things like that, we are seeing people purchase art and they are putting it in their homes.”
Grand outdoor spaces
Building on the trend of making indoor-outdoor living a permanent fixture in the wake of the pandemic, Curry said that buyers are sparing no expense when it comes to creating elaborate outdoor spaces at home. That might include outdoor kitchens, large screened-in rooms, custom ceiling fans, or misters, among other features.
“[Buyers] are wanting a lot of space outdoors,” Curry said. “So they’re wanting outdoor kitchens, and then they’re wanting full outdoor living spaces where you can actually screen them.”
Some buyers are even creating outdoor spaces with retractable screens that can be operated by a remote, so that screens can be in use or not, depending on the need and the season.
Since many people continue to work remotely in the Atlanta metro area, Quiana Watson of Watson Realty Co. said outdoor living space in the market is still extremely desirable for luxury clients as well.
“The metro Atlanta, Georgia, luxury market is shifting towards modern homes with large open windows and elaborate outdoor living spaces,” she told Inman in an email.
Custom builds with all the upgrades
Luxury clients are known for wanting to put their own stamps on their homes, and Curry said she’s seen more and more sign contracts for custom builds recently, which typically take about 12 to 18 months to complete. With supply chain issues continuing even now, years into the pandemic, the costs of builder materials can change significantly over the course of a year, so those custom home contracts often include escalation clauses in case materials costs change.
From the start of a project to the end, Curry said that a home’s price can increase by 5 to 10 percent, and occasionally even more.
“Typically we try to negotiate with them to keep it more or less, for my clients, we try to keep it no more than 5 percent [escalation],” Curry said, “but on some builders, they’re saying 10 percent, and then some, they don’t have a cap.”
Even though prices can fluctuate from the initial estimate of custom homes, buyers are still going all-out and opting for a number of upgrades from the basic home models, she added.
“We are seeing people do, I would say about 25 to 30 percent over [the base price] in upgrades of the salesperson’s home, which I think is very interesting because you know, of course you see the model, and the base doesn’t look like the model unless you add all these different things,” Curry said. “So we’re seeing a lot more customization.”
Some of those customizations include converting bedrooms into gyms and adding double square staircases — a more unique design, rather than the more common circular double staircase.
Homes that fulfill every need
“Being able to live, work, workout and entertain at home took on a whole new meaning during COVID and has become a part of today’s lifestyle,” James Harris, of The Agency in Los Angeles, told Inman in an email.
Harris said that clients are still seeking out homes with state-of-the-art fitness centers, extravagant home theaters, car and art galleries, elegant wine storage rooms and hidden panic rooms.
Likewise, Curry told Inman that clients are now taking their home offices to the next level with the help of interior designers.
“That’s one of the biggest changes that we’re seeing from people — they are recreating that home office that is not so much of a home office, or it looks more commercial in terms of the appeal of it,” Curry explained. “It’s very modern and we’re seeing them with very high ceilings … It needs to be a lot more detailed, a lot more elegant, or for the men, a lot more handsome, and they’re doing colors in the office. They’re having interior designers come in and actually design the space.”
Summer window shopping
Ponte said that although, historically, buyer activity slows in summer — and recent sales reports have shown fewer transactions, even in the luxury realm — he predicted that the busy markets of the past two summers is a trend that’s likely to continue in future years.
“I think one of the other things about summer luxury trends that has really changed over time is the idea that buyers are not as active in summer because they may be on holiday or they may be at a second home and they are not looking in their primary place of residence for a new home,” Ponte said. “I think what we see for sure … [is] the number of people that are online looking at properties and sort of browsing real estate increases dramatically in the summer because people are on vacation. There are many couples who, many decision makers, whether they’re married or single, will have the time when they’re traveling to look at a bunch of properties online to really focus in on this search.”
In addition to browsing listings, decision makers on vacation also have the time to do virtual tours with an agent via FaceTime, and get a good idea of what a property’s like in their primary markets, Ponte added. And even though mortgage rates have risen rapidly in recent weeks, they’re still at historic lows that many buyers want to take advantage of before they increase much more.
“The idea that the market in and of itself slows down seasonally is not the case now,” Ponte said. “There’s enough pent-up demand, there’s enough rush to market while interest rates are perceived still to be at historic lows but higher than their lowest low and a lot of people would prefer to lock in at today’s rates and maybe use an adjustable rate mortgage to help get them a better monthly cost … My guess is when we look back at this summer, we will see a higher volume of transactions than we would expect.”
In Jersey City, Hoboken and other parts of the Gold Coast where Compass agent Diana Sutherlin operates, she said New York City residents are increasingly testing out the waters in the area by renting at newer high rises to see if they’d like to make a permanent move.
In general, her clients are taking a more measured wait-and-see approach to their transactions in the wake of recent stock market turmoil. (Unlike buyers with lower budgets, they’re not usually impacted by mortgage rates since a lot of the luxury buyers she encounters are cash buyers.)
“They’re kind of coming out of New York City, having not ever thought they’d leave New York, but they’re sort of trying out being very close proximity and then they’re buying second homes, they’re buying places down at the beach, out in the country,” Sutherlin said.
This shift of New York City clients comes at a time when Manhattan’s median rent has hit a new high of $4,000 per month, according to a recent report from Douglas Elliman.
Amidst higher-than-usual flight prices and fuel costs, as well as significant European travel disruptions, many luxury clients are opting to vacation much closer to home this summer, Harris said.
“As travel costs surge, we are starting to see more demand for summer rentals. Many are waiting out the high airfare, hotel and gas prices and opting for staycations by the beach, the desert or the mountains. Anywhere with a relaxing vibe and great walkability factor is key.”
Those higher costs also present an opportunity for individuals who plan to rent out properties this summer, Harris added.
“This is a great time to earn potential high-season rental income.”
Get Inman’s Luxury Lens Newsletter delivered right to your inbox. A weekly roundup of all the biggest news in the world of high-end real estate delivered every Friday. Click here to subscribe.
Email Lillian Dickerson