Agent Essentials

Shop Talk - The Real Estate Agent Podcast


Real Estate Agent Podcast Episode 71: Luxury Real Estate

Episode 71: Luxury Real Estate
July 14, 2021

For some of your high-end clients, finding the right home doesn’t necessarily make your job easier due to the higher budget.

 
In this first quarter of 2021, Redfin had found that luxury sales had increased by more than 41% year over year.

McKenna Keller

About This Episode

The demand for luxury homes in the U.S. has never been higher. As luxury markets throughout the country reported significant growth during the pandemic, households sought out more space for their family and career needs. 

Additional reading:

Institute for Luxury Home Marketing - Luxury Market Report

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Episode Transcript

BRETT: The luxury real estate market often seems like a mystery. What truly defines a luxury home? Is it the high-end finishes and fixtures, or the luxury amenities like home theaters or wine cellars that create such an estate. Let’s unveil the mystery behind luxury real estate and how this niche market is favoring today.

BRETT: Hello and welcome to ShopTalk, the real estate show. I’m Brett Van Alstine and in this episode we’re talking about the Luxury Real Estate market.

BRETT: Joining me now is McKenna Keller, Content Marketing Specialist here at The CE Shop. McKenna, thanks for joining us today on the podcast.

MCKENNA: Hey Brett. Yeah, no problem. Thank you so much for having me.

BRETT: It's always a pleasure. Today, I guess before we really do a deep dive into luxury real estate, let's kind of talk about what exactly is luxury real estate and like what defines a luxury property.

MCKENNA: Yeah, that's a really great question. I kind of feel like luxury is such a buzzword right now, you know, like you can have luxury flooring or like a luxury bath. But yeah, it doesn't necessarily mean that the home technically qualifies as a luxury property. So when we're talking luxury real estate, we're really referring to those homes that are priced over $975,000.

MCKENNA: So these are going to be, you know, the larger homes they might have, like those more expensive kind of higher end finishes. And a lot of times they'll have those special amenities, like maybe a pool or a spa, or we've even written about some that have like a helipad or a basketball court. Wow. Yeah. So there's yeah, I know. Right. They're just going to be those really like exceptional properties where if you sort by price highest to lowest, they're going to be like right there at the top.

BRETT: Oh, okay. Yeah, that makes sense. Okay. So how has this niche market fared during the pandemic over the last year with all the ups and downs?

MCKENNA: Yeah, so the luxury market has actually done really well throughout the pandemic. In this first quarter of 2021, actually Redfin had found that luxury sales had increased by more than 41%. Wow. Yeah. Year over year. And for some context, if you kind of compare that to more affordable homes which they kind of define as costing around $184,000. Okay. Those only grew by 7%. So that figure is pretty significant. It's probably mostly due to all of these wealthier Americans who, you know, can suddenly work from home. And they're really wanting to get more out of their properties. So instead of like renting, you know, a smaller space in a big city they can kind of afford these huge compounds like out in the countryside. And maybe they do want to go bowling or take a helicopter ride. And if you can afford that, then why not?

BRETT: I was just going to say, why not, if money kind of like money can buy you whatever you'd like, right.

MCKENNA: The basketball court’s closed. So you just buy your own.

BRETT: So do you think the market's success this past year will continue into 2021?

MCKENNA: Yeah. You know, I absolutely do. I was reading the other day survey from USA today. I think it was from May, 2021. And they found that nearly half of all Americans want to continue working from home entirely. Okay. And then on top of that, 35% really want a hybrid schedule where they alternate between working from home and working in the office. So that means that there's only 25% of people who actually really want to go back to the office full time. So I think if a company is kind of given to that demand, I think that buyers in general, and certainly these wealthy luxury buyers, they're just going to keep on purchasing.

BRETT: Yeah. I mean, if you have the flexibility and again, the, the money to do so, why wouldn't you,

MCKENNA: Right. If you're looking to get more out of your home and now you have the means to do that then.

BRETT: So you were saying that obviously these luxury buyers are looking for, I guess they're kind of moving out and wanting to find more space. And you had mentioned that a lot of these luxury homes come with luxury amenities. What are the trends that you've noticed kind of happening in the luxury home market?

MCKENNA: Yeah. There have been some pretty interesting trends on the whole and, you know, luxury real estate included for one, there's been like a huge emphasis on outdoor space, which makes sense. Yeah. We've all been cooped up for a year. So people are really excited about like beautiful landscaping things like outdoor kitchens, maybe outdoor showers really any opportunity for outdoor recreation, I would say. And then the other big thing is obviously like home offices particularly for some of these wealthier buyers, they might be looking for the dens, the studies libraries, or maybe even like a spare bedroom that you know, the kids can complete schoolwork in. And they obviously can also afford some of the more high-end finishes kind of like we talked about. So maybe built in cabinets or like bookcases for all of their materials or like a fireplace in the study. I saw like a home here in Denver, the other that had a home office and the home office actually had its own private patio. So just overall I think, you know, that convenience is just really winning out specifically with the high-end buyers. And again, yeah, we're all spending more time at home. So it's like, who wouldn't want their own home office with a private patio?

BRETT: Yeah. I mean, why not make it comfortable if you can? Okay. So what are for, I guess, real estate agents that are wanting to break into this niche market? What are some steps that agents can take to, I guess, get started and really hit the ground running?

MCKENNA: Yeah, absolutely. You know, I think the first thing you're going to want to do of course is either get a license if you don't have one or ensure it's up to date. And maybe you can even complete your CE while you're at it. Then you'll probably want to just kind of dip your toes into the industry before you dive in. So that might look like shadowing, a local luxury agent who's, you know, well-known in the community or you could even join like a luxury specific brokerage to kind of start getting that foundational knowledge. Then you're definitely going to want to start networking. And when it comes to luxury, that tends to look more like immersing yourself in that lifestyle. So you might want to attend some luxury events get to know those thought leaders in the industry.

MCKENNA: And you'll definitely want to kind of frequent or become a fixture in some of your local wealthier neighborhoods. Okay. And then a lot of agents might want to, up-level their marketing, obviously this is a very different target audience. So you might want to invest in like some high quality clothes, some nice business cards. You may want to update your website and get some professional headshots. The other thing is you know, you'll be taking these wealthy clients to, and from showings, you might need a nice car, whether that's a rental or your own, right. And then if you really want to go the extra mile there, like some industry designations, you can get a, I know the national association of realtors has like a luxury home certification that you can use to just kind of show clients how serious you are and, and help you stand out from the competition.

BRETT: Yeah. And that makes sense. I feel like during some of my research, I definitely found that a lot of these luxury home buyers are one pretty educated, but they're very savvy and they definitely understand what's going on. And they'd like to kind of get the best deal, obviously, who doesn't. So having that credibility to back up their services, I think would be huge.

MCKENNA: Totally. Yeah. They want someone with the credentials, you know, and they can afford it.

BRETT: Right. Well, that makes sense. Well, thank you very much for hopping on the podcast. It's always a pleasure having you on and thanks again for this little knowledge bond you had.

MCKENNA: Yeah, of course. Thank you so much for having me, Brett. Of course. Thanks.

BRETT: After the break, we take a look at the luxury market trends for 2020 and how you can break into this high-end market.

BRETT: When luxury home buyers need a savvy agent with experience in high-end homes, they need the best real estate agent they can find, which is why so many of them choose to learn with The CE Shop. Learn online with our mobile-friendly courses and save 25% right now with promo code SHOPTALK.

BRETT: Over the last year we’ve witnessed an alignment of influential factors in the real estate market that have created a perfect storm for luxury real estate, creating demand for $1 million plus homes throughout the nation. While each housing market possesses their own nuances, some key trends have been consistent across the country.

BRETT: Low interest rates coupled with remote work and lockdowns pushed affluent households to find more space outside crowded cities, seeking more room both within the home and outside of it. This desire for more space was universal and re-shaped the needs of households nationwide.

BRETT: The demand for larger homes with more space has reigned true, bucking the previous trend of “less is more”. Today, affluent buyers want a home that can serve multiple functions for themselves and for their families. Interest in home offices has skyrocketed with 53% of homebuyers saying they would choose a home office space over an extra bedroom.

BRETT: This demand for space and more multi-function rooms has driven the number of homes that sold for more than $1 million up, rising 81% in February 2021 year over year, according to the National Association of REALTORS®. For markets in the Midwest, this number doubled within the same time period. While inventory continues to dwindle, some homes remain on the market for long bouts, which shows that while these buyers aren’t concerned about the price per se, they are still savvy buyers that will not pay for an overpriced home.

BRETT: Here in Denver, where we’re based, the luxury real estate market has been red hot for years with the pandemic pushing the niche market to its peak. Denver Metro’s luxury home sales volume rose by 98% year-to-date, reaching a total of $749,281,436 spent on luxury properties between January 2020 through February 2021.

BRETT: The top luxury home markets in the U.S. are not surprising, but there are some newcomers to the ranks. California’s luxury home market is still the reigning champ, with Manhattan following close behind, and Seattle following suit. Denver is a new addition, as Jefferson County was the fastest-growing luxury housing market in the fourth quarter of 2020.

BRETT: For agents looking to break into a new niche market, luxury real estate is a great choice if you have the patience and networking know-how. Never more true is the saying “It’s who you know, not what you know.” Much of luxury real estate is building your network to feed leads to you from either colleagues or previous clients. As big as the dollar signs can be surrounding this niche market, the community is close-knit, with buyers and sellers alike often knowing either party to help forge connections.

BRETT: To begin this branching out process, start with core marketing pieces that you hand out. Whether that be business cards, your social media profiles, or your website. Let the market know who you are, what you specialize in, and how you can help. Remember, you have the skills they need to get a great price on their dream house.

BRETT: As mentioned before by McKenna, agents who want to break into this space need to take action. Getting foundational knowledge through a mentor or brokerage that specializes in Luxury Real Estate is a great way to absorb information that can help you grow your career. Getting out there and attending networking events, conferences, fundraisers, any event that can help you get some face-to-face time with the right people. Agents should uplevel their marketing. This can be through high quality clothing, attractive and engaging business cards, or even a spruced up website. Additionally, agents can take steps to earning certifications that give them credentials for those savvy buyers seeking agents that truly know their stuff.

BRETT: That’s it for this episode, thanks for listening! If you enjoyed the episode, you can subscribe to us and leave a review on your podcast player of choice. Join us next time for a talk with Yusef Alexander, The VP & Chief Business Development Officer at Real Estate Asset Partners. Shop Talk is a production of The CE Shop.