From the rise of ‘quiet luxury’ to the growing influence of Gen Z, Christie’s International Real Estate identified several trends that are shaping the luxury real estate market in 2024. Those trends are detailed in the brand’s recently released Global Luxury Real Estate Forecast. The report is based on surveys and interviews with Christie’s International Real Estate affiliates from more than 20 countries. Read on for the forecast’s top takeaways.
Mansion Taxes Aren’t All That
A growing number of North American cities are counting on taxes on 7-figure home sales – often called mansion taxes – to address a myriad of issues, but initial results of these measures show the costs may far outweigh the benefits.
In Los Angeles, which implemented Measure ULA early last year, uber-luxury real estate sales fell by 60% according to a leading broker, and commercial property transactions suffered an even bigger hit per an analysis by the Los Angeles Business Journal. Originally, the plan’s sponsors said Measure ULA would generate $900 million per year; however, in the first four months of its existence, the tax brought in just $55 million.
In Chicago, which will vote on its own version of a mansion tax in March, a new study shows that the measure could impact all homeowners – not just mansion owners. That’s because commercial real estate values, which have already been hammered by high interest rates and high vacancies, will take another hit from higher transfer taxes. As the assessed value of these properties declines, residential assessments will go up to cover the county’s total tax levy. And that means all homeowners are likely to pay higher property taxes.
Quiet Luxury is Making Noise
Today’s affluent homebuyers are embracing the trend of “quiet luxury,” characterized by understated elegance and a ‘less is more’ mindset. In interior design, quiet luxury is often associated with natural high-quality materials such as rich wood, marble and stone; neutral and muted tones; and classic investment pieces that have timeless appeal.
Ostentation is out, and some luxury buyers are no longer prioritizing sprawling estates. Christie’s International Real Estate expects quiet luxury to remain popular among high-end consumers throughout 2024 in all facets, from fashion to real estate.
Record Demand for Luxury Items
Christie’s International Real Estate’s exclusive partnership with Christie’s gives us a glimpse into all things luxury, and Christie’s reports that while the art market saw a contraction in 2023, demand for jewelry, watches, handbags and wine showed no signs of slowing. The auction house predicts this thirst for luxury items will continue in 2024. In particular, colored diamonds and stones, unusual materials and sizes, limited and runway editions and other extreme rarities will be sought-after.
The report highlighted several successful collaborations between Christie’s International Real Estate and Christie’s auction house, including the sale of the only Frank Lloyd Wright-designed home in Milwaukee, Wisconsin, which sold with the seller’s collection of original Wright-designed furniture pieces.
Gen Z Is Ahead of the Curve
The oldest of Gen Z consumers, born between 1996 and 2012, are entering luxury real estate markets around the world. In America, hot spots like Los Angeles and Miami have seen an influx in HNW Gen Z homebuyers, while in Europe, Gen Zers are attracted to countries like Italy, driven by favorable work programs and the well-documented Gen Z desire for remote work.
In their choice of homes, Gen Z luxury buyers are prioritizing eco-friendly living, high-tech features, and homes that require little to no maintenance. To satisfy their desire to travel, they are also more interested in purchasing several smaller homes in multiple locations instead of one large estate.
University Towns: The Next Luxury Frontier
From Ann Arbor, Michigan to Athens, Georgia, university towns across the country have witnessed a boom in luxury home sales within recent years, as affluent buyers are seeking big-city amenities in a small-town setting with a lower cost of living.
Healthcare, tech and the university economy fuel high-paying jobs that attract everyone, from Millennials to those nearing retirement. Even buyers with no prior connection to the university are attracted to college towns due to lifestyle factors and a lower cost of living.
In Ann Arbor, average home values have increased 47% since 2018. And in both Ann Arbor and Madison, Wisconsin, transactions for homes at $1 million or more have tripled over the past few years.
High Demand, Low Supply Continues
Demand for luxury homes and estates was resilient in 2023, despite spiking interest rates and worries about inflation. While rates have stabilized and inflation is slowing, the supply/demand dynamic is expected to continue in 2024, according to the report. Approximately 75% of Christie’s International Real Estate brokers predict that luxury demand in 2024 will be equal to or greater than last year. Meanwhile, around 40% of those brokers expect no meaningful increase in supply. This will drive competition and push up prices, creating a seller’s market in many locations in 2024.
In Chicago, home-price gains have recently been trending above the national average as tracked by the S&P CoreLogic Case-Shiller Index.
For more market insights, or if you’re thinking about buying or selling your home, reach out to an @properties Christie’s International Real Estate agent today.