Spring, Taxes, Global Impacts, and New Realities
It was predicted last year that the new tax laws in the US, limiting deductions on mortgage interest and property tax, would cause a slowdown in the overall real estate market. However, it would seem that they have had very little effect. The reality is that other factors have had more influence in the luxury market for both the US and Canada. It has been the impact of global economic uncertainty, changes in purchasing decisions, and a relocation away from high local taxes that have caused the most significant differences. Lawrence Yun, NAR chief economist, stated in January 2019 “The forecast for home sales will be very boring – meaning stable,” and as we can see from the North American statistics (that represent over 65 of the top affluent cities) this statement is, for the most part accurate. In a recent report from Mansion Global, it was stated that while the average entry price for a luxury property has risen to $1.26 million in February – a 3.9% rise – the average market price for luxury homes has dropped 5.1% compared to the same time last year.* It must be clarified that Mansion Global focuses on the Top 5% of the market, whereas The Institute focuses on home sales in the Top 10%. As recognized in previous reports, there are markets still seeing growth in their sales and price points, typically lower-priced or new luxury markets such as Houston and Austin in Texas, Nashville in Tennessee, Arlington in Virginia, and Montreal and Ottawa in Canada. However, the majority of luxury communities have seen a plateau in their sales and home values and a number of traditionally expensive cities, whose price points are typically higher than average, are seeing a decline. To gain a perspective of the luxury market from the ground up, we are turning to our members to provide their local insights on the trends and expectations of this transitioning market. Look to see how these findings could also prove relevant to your market or property type.
Read the full report here.