Homebuyers continue to show strong demand and prove that there isn’t a summer slowdown despite the Covid-19 pandemic.
According to the National Association of Realtors, pending home sales, which measure signed contracts to purchase existing homes, increased 5.9% in July compared with June, and sales were 15.5% higher annually.
NAR’s Chief Economist Lawrence Yun said, “Home sellers are seeing their homes go under contract in record time, with nine new contracts for every 10 new listings.”
Yun does not expect sales to drop or become slower this fall season. He anticipates existing-home sales to reach 5.8 million in the second half of this year. This would then bring the full-year total to 5.4 million, showing a 1.1% increase compared with 2019.
Based on NAR’s index, the housing market activities from pent-up demand is in good shape. Pending home sales in the Northeast rose 25.2% for the month and were up 20.6% from a year ago. In the Midwest, sales rose 3.3% monthly and 15.4% annually. Sales in the South increased by 0.9% for the month and were up 14.9% from July 2019. Sales in the West rose 6.8% monthly and 13.2% annually.
“Anecdotally, Realtors are telling me there is no shortage of clients or home seekers, but that scarce inventory remains a problem,” Yun said. “If 20% more homes were on the market, we would have 20% more sales, because demand is that high.”
July sales of newly built homes, which are also measured by signed contracts, surged dramatically, as buyers are now looking for new, high-tech, smart homes with floor plans designed for working and schooling at home. Builders are also benefiting from the severe shortage of existing homes for sale.
U.S. home sales increased for the second straight month in July and home prices also hit a record as low-interest rates increased the demand for homes even if the coronavirus pandemic put millions of people out of work.
According to the National Association of Realtors, existing-home sales rose by 24.7% to a seasonally adjusted annual rate of 5.86 million units last month. Data for June was revised slightly to a 4.70 million-unit pace from the originally reported 4.72 million.
July’s rise was the second consecutive increase, followed soon after a monthly increase in June, and raised the sales pace above the 5.76 million pace in February before the pandemic caused a momentary drop in sales. July’s level was the highest since December 2006.
“The housing market is well past the recovery phase and is now booming with higher home sales compared to the pre-pandemic days,” said Lawrence Yun, NAR’s chief economist. “With the sizable shift in remote work, current homeowners are looking for larger homes and this will lead to a secondary level of demand even into 2021.”
Economists surveyed by Reuters had projected sales rising 14.7% to a rate of 5.38 million units in July.
Existing home sales, which make up about 85% of U.S. home sales, increased 8.7% on a year-on-year basis in July.
The 30-year fixed mortgage rate is at an average of 2.99%, hovering near levels last seen in the early 1970s, according to data from mortgage finance agency Freddie Mac. Data earlier this week showed homebuilding surge by the most in nearly four years in July.
Housing has been a bright spot in the economy even as other sectors suffer amid widespread coronavirus infections that have slowed commerce and kept unemployment high. More than 28 million people were collecting jobless benefits at the end of July.
The pandemic steered the economy into recession in February, ending a record-long expansion that had brought U.S. unemployment to a 50-year low.
Home sales rose in all four regions in June.
There were 1.5 million previously owned homes on the market in July, down 21.1% from a year ago. The median existing house price increased 8.5% from a year ago to a record of $304,100 in July.
At July’s sales pace, it would take 3.1 months to exhaust the current inventory, down from 4.2 months a year ago. A six-to-seven-month supply is viewed as a healthy balance between supply and demand.
Pending home sales continued to increase rapidly for the second consecutive month in June despite the COVID-19 pandemic. Based on the Pending Home Sales Index from the National Association of REALTORS®, an increase was seen in the month-over-month contract signings from each of the four major regions in the U.S. as home buyers rushed out to purchase homes across the country.
NAR’s index shows that contract signings increased by 6.3% compared to a year ago.
NAR’s Chief Economist Lawrence Yun said that the contract activity for home purchases is higher compared to a year ago is quite surprising and remarkable considering that we are all amid a global pandemic. Consumers are taking opportunities from the record-low mortgage rates resulting from the Federal Reserve’s maximum liquidity monetary policy.
NAR’s Pending Home Sales Index jumped 16.6% month over month in June to a reading of 116.1.
See snapshot of housing report below:
Yun also said that the strong bounce-back comes after a longer lockdown in the Northeast region. The South, on the other hand, has consistently outperformed the rest of the country. And these remarkable rebounds equate to exceedingly a higher buyer demand.
Upbeat Forecasts for 2020 and Beyond
Because of the recent turnaround in contract signings, NARs adjusted its overall housing forecast. For 2020, NAR is now projecting existing-home sales to decrease by only 3%, with sales increasing to 5.6 million by Q4. New-home sales are projected to increase by 3% this year.
Yun is auspicious that positive GDP growth of 4% in 2021 will drive, on both existing and new, higher home sales. He forecasts existing-home sales to increase by 7% in 2021 and new-home sales to increase by 16%.
Home prices are also projected to increase by 4% in 2020. Yun predicts prices will moderate in 2021 but still increase by 3% as more supply is expected to hit the market.
Low financing costs are expected to continue to attract home buyers. NAR predicts that mortgage rates will stay at or near 3% over the next 18 months.
Coronavirus made consumers reassess the factors that make up the “perfect home”. Locations and layouts of their existing homes were taken into consideration. The appeal of a more congested city life appears to be giving way to either suburban or less congested rural life. The interest with an open floor plan faded as people needed more privacy while working from home.
A recent report from news.com showed that buyers are now leaning heavily for more listings of suburban and rural properties.
Here are the year-over-year percentage increases in views per property type:
Urban – 7%
Suburban – 13%
Rural – 16%
Realtor.com’s Director of Economic Research said that the migration to the suburbs is not a new trend but it became more prominent. After several months of staying home, the urge to have more space, and the probability for more people to work from home are factors contributing to this.
Realtor Magazine also reported that the desire to move is strongest in our city markets.
The pandemic also altered how consumers think about floor plans that is
The pandemic also altered how consumers think about floor plans that is why builders are anticipating changes in how future homes will look like. Zillow explained in a recent press release that:
Builders believe as people spend more time at home during the pandemic, buyers are realizing which features of their homes are working and not working.
Homebuilders predict open-concept floor plans will be a thing of the past, as people now value more walls, doors, and overall privacy.
New construction, which offers the chance to personalize home features, saw its listing page views grow by 73% over last May.
The pandemic is impacting the luxury market too. Realtor.com’s Chief Economist previously reported that stay at home and social distancing orders made ‘extra space’ even more relevant. This leads high-end buyers to find a second home that is within driving distance from their primary residence.
It seems that a percentage of people are preparing to leave many American cities. These moves may be permanent, while others may be temporary. In either case, many consumers are on the move and Real Estate Professionals are always ready to help.
With the rising home prices, it seems that luxury homes are bouncing back as homebuyers returned to the market in full force in May.
According to realtor.com’s Luxury Housing Report released on Thursday, the luxury market outpaced the rest of the housing market in both price growth and views.
Luxury home sellers returned to the market with new listings of homes priced above $1 million, dropped by 15.1% year over year in May, compared to 57.8% in April. This means that luxury home new listings were still reduced, but to a lesser degree than the month prior. However, like the rest of the market, low inventory is the biggest challenge for these homebuyers.
Chief Economist, Danielle Hale, says the luxury market is leading the recovery. Stay at home and social distancing orders made ‘extra space’ even more relevant. This leads high-end buyers to find a second home that is within driving distance from their primary residence.
Only 25 of the 94 luxury markets tracked by realtor.com showed listing price growth since January. The pandemic has also slowed price growth in the luxury market, which had increased by 15% at the beginning of the year.
Zillow said new listings of higher-end homes dropped by 46%, while the less expensive homes are reduced by 32%. In response to the pandemic, new listings of the most expensive homes were the first to drop below 2019 levels, while cheaper listings fell over a week later.
According to realtor.com, luxury listing price entry points reached $2.97 million in May despite a small pace of growth. This is up 0.5% from April and 6.1% year over year.
As Hale said, it’s the luxury market that led the housing market’s median price growth, which was up 1.6% in May year over year.
After falling 9.5% year over year in April, searches for million-dollar homes grew 7.3% year over year. This topped the 6.2% growth that we saw before the pandemic slowed things down.
Not only are luxury listings seeing more viewers, but popular second-home markets are seeing the love, too.
Sotheby’s International Realty is pleased to announce that its affiliated brokers and sales professionals achieved more than $114billion USD in global sales volume, the highest annual U.S. sales volume performance in the history of the brand. $102 billion USD of the global sales volume was achieved in the U.S., marking another record accomplishment for the brand.
“In 2019, the Sotheby’s International Realty® brand continued to achieve solid growth,” said Philip White, president and chief executive officer for Sotheby’s International Realty. “The brand expanded into new countries and territories and entered new markets in the U.S. We continued to make strategic business decisions that benefitted both our independent sales associates and affiliate companies. I am immensely proud of the hard work and dedication from our vast global network, and I look forward to continuing this momentum in 2020.”
Propelled by a strategic business move in March 2019, when Sotheby’s International Realty integrated its affiliate network and company-owned brokerage into one global organization, 50 new Sotheby’s International Realty offices were opened, bringing the brand’s presence to 1,000 offices in 70 countries and territories and more than 23,000 affiliated sales associates worldwide.
Sotheby’s International Realty continued to lead the category with the roll-out of exclusive marketing affiliations and first-ever technology launches, announcing it will soon unveil a new, fully integrated website. The brand’s existing website, sothebysrealty.com, saw another record year with more than 34 million visits, a 14 percent increase year-over-year. In addition, Sotheby’s International Realty was the first real estate brand to launch and implement mixed reality to its Curate by Sotheby’s International Realty sm augmented reality app, which merges the real world with virtual home staging. The platform can be utilized in various homebuying and selling scenarios, and particularly benefits agents and developers to help prospective buyers envision their new home. To support the daily business needs of the network’s more than 23,000 independent sales associates, the brand unveiled Current by Sotheby’s International Realty® a robust marketing suite of technology tools consisting of best-in-class and exclusive apps, which provide sales associates with a distinctive and competitive edge in the market. For partnerships, the brand entered into an affiliation with Bloomberg.com as the exclusive launch sponsor for a new luxury properties marketplace.
The Sotheby’s International Realty brand and its independent sales associates continued its support for New Story, the brand’s charitable partner and a certified 501(c)(3) non-profit organization. As a result, 83 families, who were among those who lost their homes in the 2017 earthquakes, were able to move into their new homes in Morelos, Mexico. A total of 153 homes in Haiti and Mexico were funded through the initiative.
This year observed significant growth for the brand’s existing affiliate companies in the United States through recruitment efforts and strategic mergers and acquisitions. Most notably, the brand increased its market presence in Brooklyn, New York; the Greater Boston area, Massachusetts; and Indiana. The brand also entered several new key markets last year, expanding the Sotheby’s International Realty network’s presence to 43 states across the country.
Outside the U.S. the Sotheby’s International Realty brand achieved more than $12 billion USD in sales volume and continued to expand into key markets around the world. In Europe, the brand grew its presence in Monaco; France; and Berlin and Binz, Germany. New offices were also opened in Doha, Qatar; and Paphos, Cyprus, expanding the brand’s global presence in marketing luxury listings. In the Caribbean and South America, the brand saw growth in Zapallar, Chile, an upscale residential community located two hours outside of Santiago; and agreements were signed to expand into the Anguilla territory. In the Asia-Pacific region, new offices were opened in Tauranga, New Zealand; and Port Douglas, Hobart, and Perth, Australia.
It’s hard to wake up on the wrong side of the bed when your lavish private suite has a vista of city lights, mountains, vineyards, sunsets or the sea.
Glass Oceanfront Modern
An organic fusion of glass, slab stone and steel create a stunning, yet simplistic, seamless design connecting nature and architecture offering amazing ocean views and access. This home spans 3,348 square feet on 1+ acre with unparalleled quality and construction!
Masterpiece in the Sky
A modern masterpiece in the sky. Quality, design and expansive views come together that make this one of the most private and exclusive gated properties in Oregon. An entertainers dream home with Lake, River, Mountain and City views. Waking up and gazing out at this view will surely be the pinnacle of one’s day.
Private Oceanfront Estate
Inspiration, thought and craftsmanship went into the details of this private oceanfront estate home on the Oregon Coast. This estate home provides a level of tranquility and comfort that is rare on the Oregon Coast. The gated entrance leads to a circular driveway framed by a peaceful coastal pond that spreads alongside the main house to a guest house/garage with a swim spa. The main house is oriented 15 degrees to the south to take advantage of sweeping ocean views and built on 44 steel pilings. Main level living with oceanview master bedroom, living room and gourmet kitchen. The spacious deck just steps away from miles of sandy beach.
Cascade View Home
Here is a home quite like no other, built following appropriate mathematical elements in its design, harkening the builders of old, creating what is known as the Divine Proportion. The Divine Proportion exists everywhere in nature, but here the principle is applied to modern architecture. Famed cathedrals and the like adhered to this concept in an attempt to inspire all those who entered, and this home does not disappoint. Upon entry, the pavered drive is reminiscent of an Italian villa courtyard with authentically proportional solid limestone columns quarried in Indiana, shaped in Michigan and sent by train to Oregon. From a grand foyer, you can see the home is perfectly symmetrical, each wing a mirror image of the other, perfectly proportionate.
World Class Ocean Views
Unparalleled oceanfront at Chapman Point. Constructed by renowned builder Rich Elstrom. Distinguished by world-class views of Haystack Rock, Ecola State Park, and the ocean surf from the living and family rooms and master suite; the chef’s kitchen, wine cellar, and four gas fireplaces. The west side deck gives you ample room to lounge and enjoy your view and a hot tub for soothing comfort.
How the luxury world is changing, and how real estate agents can adapt.
It’s been a while since luxury was synonymous with excess. Today, what matters most to high-end consumers is that their purchases have a larger positive impact on the world, and provide them with a meaningful personal experience. Brands are looking beyond mere material opulence, and thinking about how to create a genuine sense of novelty, authenticity, and global stewardship — socially and environmentally — through the goods and services they provide.
These social responsibility and experiential purchases trends are alive and well in the world of luxury real estate: homebuyers want properties that complement their individual lifestyles while minimizing their ecological impact, and they’re connecting with agents and listings through inspirational content and storytelling on social media.
Yet the real estate market is only one piece of the luxury puzzle. Time and time again, the most successful agents are able to build relationships and close deals because they understand the world their clients live in.
Here are three macro trends that are shaping today’s luxury market — and tomorrow’s.
1. Conscious consumption
Luxury consumers tend to be well-informed, and the majority are concerned about climate change: 56% of those 55 and older, 62% of those between 35 and 54 years old, and 70% of 18 to 34-year-olds. Moreover, that last group — millennials and Generation Z — will constitute as much as 40% of the luxury market by 2025.
This emerging demographic cares more than its predecessors about ethical and transparent production processes, philanthropic brand purposes, and personalized experiences. And 89% are willing to spend more on companies they consider ethical and sustainable.
It’s no surprise, then, to see leading fashion brands embracing environmental awareness. Stella McCartney’s “World of Sustainability” platform is just one high-profile example of how brands are leading the conversation on conservation. Others are sourcing premium materials for products, and creating distinctive, eco-friendly packaging that lends itself to a unique — and highly Instragrammable — unboxing experience for social media-savvy consumers without creating unnecessary waste.
For agents, this means that every aspect of your engagement with a client should be considered through the lens of transparency and sustainability. Has your business made strides to become more efficient and less wasteful? Do you have a clearly defined set of ethics? Give these initiatives pride of place on your website and social media channels so that clients can identify you by your values. And consider your interactive offerings: make every open house an experience, whether that’s laying out apéritifs at a remarkable property at sunset or sharing a virtual reality showing with a remote client. Your clients may not be unboxing a home, but the experience should impart joy nonetheless.
2. Purposeful collaboration
Individuality and creativity are of central importance to the emerging affluent consumer, so it comes as no surprise that exclusive collaborations are still a mainstay in the luxury market. However, their magic could be starting to wear off: after all, these collaborations — and the buzz they generate — often signify social status over social engagement. Without a fresh, forward-thinking take, such partnerships could fall out of favor.
In the 2020s, expect to see leading luxury brands keeping the collaboration ethos alive by embarking on innovative, cooperative projects that resonate with the values of affluent consumers while taking a longer view of social and environmental issues — subverting and exceeding their expectations as a result.
Think about the collaborations that would feel authentic to your business. Is there a leading renewable energy company in your market you could partner with on a project? A notable designer? Without going overboard, seek out partnerships that make sense from a brand perspective: collaboration should feel in step with the work you’re already doing while exposing your initiatives to a fresh audience.
3. In-person touchpoints supported by digital tools
A major factor in the growth of the global luxury market has been a year-over-year increase in online sales. And that’s only going to get stronger as millennials and Generation Z drive even greater engagement on digital channels. Today, around 10% of luxury sales take place through ecommerce; by 2025, that’s projected to be 25% — from one in 10 purchases to one in four.
In response, brands are more focused than ever on creating “phygital” touchpoints that merge the physical and digital worlds into a frictionless, omnichannel experience. Data analytics, facial recognition, and Internet of Things (IoT) sensors are just a few of the technologies that will help companies build more complete customer profiles, providing adaptive, hyper-personalized service while also enabling consumers to connect more deeply with their favorite brands.
Agents will be familiar with balancing digital and in-person customer interactions. Whether through virtual reality tours that enable potential buyers to visually inhabit a listing, or the rise of social media as a way for agents to connect personally and professionally with clients while positioning themselves as industry experts and lifestyle influencers, digital is on the rise in the luxury real estate space. But it doesn’t replace the personal touch. Customer relationship management (CRM) systems leverage data analytics to keep agents informed of their clients’ needs, preferences, and milestones, reminding them when to reach out to clients and why. Personalized service has long been a central pillar of luxury real estate, and digital tools are making it even easier for agents to reach out in person.
The merging of online and real-world experiences, along with the aforementioned trends in luxury, provide the background context in which today’s luxury buyers live and work — and it sets the tone for how they purchase homes as well. Whether it’s marketing materials that grab attention or listings more appealingly designed for social, agents should be thinking about how to engage with clients who are already attuned to the cutting edge of luxury.
Daring designer Fritz Junker has a pad, tucked halfway up Portland Plaza’s iconic downtown tower, that is being promoted as perhaps the city’s sexiest condo for sale.
Forget the photos of mood lighting in the curving living room, the master suite’s mirrored ceiling or the bathrooms’ black tile double showers and oil-filled towel warmers.
It’s the teasing marketing video that publicizes that this “mid-level penthouse,” priced at $1,450,000, was designed to be like no other.
In five minutes, viewers can watch Junker and Bree Kemp dodge a spoofy villain type as they glide past the Portland Plaza residential tower’s amenities, from the round-the-clock concierge staff to the sophisticated lobby, before escaping to their high-tech home with darkening windows and a concealed safe room.
She changes outfits, from playful to pool to formal, while he remains in his tuxedo, even while working out in the gym with a dumbbell in one hand and martini in the other.
Junker’s script inspiration: After showing his friend the midcentury condo Junker gutted and rebuilt at 1500 S.W. 5th Ave. #1101, the friend had a one-word reaction to the experience: Illicit.
“There’s something going on here that’s sexy and sleek,” says Junker, who was an independent filmmaker before founding his design-build general contractor and interior design firm, Fritz Jünker Design & Remodeling, in 2007.
When Junker put his remodeled condo on the market, he and listing agent Jason Mendell of Cascade Sotheby’s International Realty decided to produce a “fun little video with a James Bond vibe that would showcase the home,” he says.
The elevated home is unique. In 1973, the original owner — some longtime residents believe it was the developer — somehow acquired a custom, double unit. This meant more than extra space, but granted him a circular living, dining and lounge space with 180-degree glass panels that curve and capture a view of Mount Hood.
Single condos in the triangular tower have a wall dividing the round corners, making those living rooms a half moon shape. You can see that figuration in a condo Junker remodeled and sold on the sixth floor.
He has lived for 15 years in various units inside the 25-story, glass-and-aluminum tower designed by celebrated architect César Pelli and the Los Angeles firm DMJM (now AECOM).
served on the homeowners’ association board while the property, which consumes
the entire block across from Keller Park, underwent a $10-million modernization
completed in 2017.
said it was important for the changes to reflect the building’s heritage and
original caliber of design, and to “reclaim its status as a premier Portland
He has been hired by other Plaza homeowners to update their condos. High-end, well-crafted finishes play up the views from floor-to-ceiling windows. Upgrade can cost around $200,000.
For his home, he wanted to showcase 1970s finishes such as black glass and natural wood paneling. Here, gray-washed oak floors float on top of rubber underlayment.
Museum-quality oak display cases cling to concrete walls and columns, and LED lights outline curving soffits and coves.
He removed the galley kitchen to create an open kitchen with black leathered granite surfaces and a bar area with black glass cabinets.
And he installed $100,000 worth of audio-visual equipment, lighting and shades controlled by touchpads or apps.
The theater has an 82-inch Samsung ultra-high definition screen recessed into the custom cabinetry and Flagship Paradigm speakers and Anthem amplifiers. There is also a 4K LED TV in the bedroom.
“This condo is for someone who appreciates architecture and fine design,” says listing agent Mendell. “It’s a home built with precision and style and is a great example of the best of the best here in Portland.”
Mendell says he sees many spectacular luxury condos in the city, but nothing quite like this 2,436-square-foot unit.
“There is a level of
creativity and craftsmanship at play here that isn’t typically available in our
market,” he says.