Have you been thinking about investing in a larger, more expensive property in the luxury housing market this year? If that’s the case, then now is the perfect time to take a look at the luxury real estate market trends and forecast for 2020 in the US. Here’s everything you need to know before buying luxury properties in the US housing market as real estate investments.
Related: Now Is the Best Time to Enter the Luxury Real Estate Market
#1. Prices of Luxury Properties
Luxury real estate investors laid low in 2019 as economic uncertainties and fears of a housing market crash turned luxury properties into risky opportunities. However, the world’s richest investors are beginning to spend money in the real estate luxury market again this year as the prices of high end homes dropped into bargain territory. What’s more, is that this drop in home prices happened in relatively stable economic cities where experts predict prices to rise in 2020. In the Miami real estate market, for example, luxury prices are expected to increase by 5% in 2020 according to The Wealth Report conducted by global property consultancy, Knight Frank.
Another factor impacting prices in the luxury real estate market 2020 is the economy. Naturally, there’s a positive link between luxury home prices and economic growth. Today, the US economy is strong which, therefore, opens up new buying opportunities in the high end of the housing market. Available inventory is another key element that has an impact on the prices of luxury properties. Luxury housing market trends in the US show that the inventory of high end homes is greater in comparison to entry-level homes. Hence, breaking into the luxury real estate market is becoming a growing reality for many investors in 2020.
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#2. Activity in the Luxury Housing Market
With more opportunities for buying luxury properties in the US housing market, real estate experts predict an increasing activity in the market. Those who have laid low in 2019 will start to come out as high end home prices are more appealing and increasing inventory means they have more options to choose from. This tells us that buyers in the luxury housing market 2020 now have the upper hand in negotiations with sellers. Plus, due to the current low interest rate, buyers can get more for their money with greater purchasing power.
Related: 8 Negotiation Tips for Buying an Investment Property
Millennials are also another segment that’s giving the luxury real estate market a boost this year (and for the next decade!). As their wealth increases, so does their desire for owning and buying luxury properties. According to Coldwell Banker Global Luxury’s report, A Look At Wealth 2019: Millennial Millionaires, the vast majority (93%) of millennial millionaires have a net worth between $1 million and $2.49 million. Plus, 45% of them are between the ages of 34 and 37, and 15% are business owners. This will contribute to the increased activity in the luxury real estate market as the report also shows that millennial millionaires show a strong interest in real estate investments where their business is located.
#3. A Buyer’s Market
Dropping home prices, increasing inventory and demand for luxury properties are trends that point to the fact that the luxury housing market 2020 is a buyer’s market. This explains why buyers now have the upper hand in negotiations and more purchasing power – and it’s another reason why you should consider investing in luxury property. Whether you’re a foreign real estate investor or a local one, experts say this is the best time to break into the luxury real estate market in the US.
Related: Will the 2020 US Housing Market Be a Seller’s Market or a Buyer’s Market?
If you’re looking for assistance from an expert to buy high end homes, we recommend contacting a luxury real estate agent in the city where you’re wishing to buy real estate investments. You should also keep in mind that, in some states, it’s the seller who pays the agent’s commission. Meaning, you’ll be able to get the help you need during the time of the transaction from a professional without having to pay them.
If you still haven’t found the best real estate agent in your area, start looking for one here!
Places Where the Luxury Housing Market Is Growing
If you’re interested in buying luxury properties to rent out, the best benefit of this strategy is the fact that these properties are located in the most attractive areas to live in. This makes it easier to market the property, have strong demand and short periods of vacancies, as well as the ability to charge higher rents and make a good return on investment. However, as with everything in the industry, luxury real estate is very market-centric. So which luxury real estate market in the US should you consider in 2020? There are three important real estate luxury markets that will see growth this year according to Knight Frank.
In their report, Paris takes the lead as the top global luxury market, followed by the Miami real estate market. Experts expect the high end condo market in Miami to have a comeback in 2020. In addition, Florida does not have an income tax which is drawing wealthy buyers and real estate investors from other high-tax states. Up next is the Los Angeles real estate market. From Beverly Hills to Bel Air, Los Angeles luxury properties will show moderate price increases in 2020 (amounting to about 2%) and demand is especially strong for luxury properties priced below $10 million. And of course, we can’t forget about the New York real estate market. Unlike other luxury real estate markets, high end home prices in New York are expected to see a decline of 3% in 2020 due to lower mortgage rates and strong employment indicators. Seeing as owning a house is hard for New Yorkers, buying a luxury property to rent out can be a smart investment decision.
You can learn more about why and where to invest in these markets by reading our market reports:
- Miami Real Estate Market Report
- Los Angeles Real Estate Market Report
- New York Real Estate Market Report
Want to start searching for high end homes for sale in one of these luxury real estate markets? Find the best performing properties with a good return on investment in a matter of minutes using our Property Finder! Sign up to Mashvisor to start.
Bottom Line
If you’re considering breaking into the luxury real estate market, 2020 is expected to be a great year for those who are ready to make that move. Still, whether or not you should be investing in luxury property depends on your financial position and ability to find investment opportunities that are worth your while. This can be solved when you use Mashvisor’s real estate investment tools that’ll help you find and analyze the best deals in your housing market of choice.
To get access to our real estate investment tools, sign up for a 7-day free trial of Mashvisor today, followed by 15% off for life.