The public’s perception of realty and property value often seems to change by the week. This makes investing in luxury real estate a potentially risky proposal, but many specialists are continuing to make money in this niche mark. Whether a homeowner is looking to sell the property that they are living in, a family is on the market for a new abode, or an investor is looking to make it big with a high-end home, it is important to carry out a little extra research before diving headfirst into this specific market.
Today’s Real Estate Market
The current market for housing and property has both positive and negative indicators, and this can be a precarious notion for those that are ready to invest a huge sum into a luxury area. Single home sales have gone down in specific geographic locations and bottomed out for commercial property while certain new home sales have shot through the roof. While this may seem daunting, it also means that investors or realtors do have quite the opportunity when it comes to luxury real estate, but it is going to take a higher investment and more patience.
A Look at The Luxury and Ultra-Luxury Market
While it may seem contrary to logic, the luxury and ultra-luxury real estate markets are actually some of the most stable when compared to the overall real estate market, but this does not mean that there are no pitfalls. Those looking to enter into this field need to understand that it is wildly different than residential and commercial properties.
According to the professionals at Century 21 Cityside, both buyers are and sellers are often in search of a “brand” so to speak, and this means that the home is product that should be branded in some manner. They said, “Whether it is by previous owners, locations, or extravagant features, the idea is to have the property stand out.”
Understanding the Past
In order to even remotely make any returns on luxury real estate, researching the past is almost always more important than researching the current market. Understanding trends, and not just short-term trends, as well as the market as a whole will put the buyer or seller at an advantage. Primarily, this goes back to 2006 when researchers from HOM saw a long-term drop extending all the way to 2009 when the market finally flat lined until 2011.While many families and businesses were finding themselves barely able to hold on, the upper echelon of investors that had tightly grasped there assets for the last few years were ready to begin investing once again.
Understanding the Present Market
After taking a look at the past, investors are going to need to understand where the market stands today. For many, the major shift has been from the “Wall Street” investors to the artists and other non-traditional demographics for luxury estates. This means they are looking for personality within their new investment, just another sign of how important branding is. While prices have climbed, it is also vital to remember that the length of listing a luxury piece of property is unlike any other home or commercial building. In order to meet at the right price, owners and their representatives will need to understand that patience is a factor and the listing often extends past the 150 to 200 day mark.
The Future
While many investors are looking to their next luxury property purchase to be a home for them and their family, some are still worried where the market will go in the next few years. As a somewhat short-term investment, even more risks will accumulate and research will become that much more important. For those that are looking for a long-term investment until the market final returns to normalcy, a little patience may be all that is needed for exceptional profits on every penny invested.
