Why Luxury Real Estate Markets Hold Prices Better

If there is one thing that everyone can unanimously agree upon, it would be to invest in real estate if you can. Experts agree that in comparison to other assets such as gold or crypto, real estate remains one of the better options. Surprisingly, however, with luxury real estate markets, things get even more bizarre. 

What is different about Luxury Real Estate Markets?

Luxury real estate, unlike the rest of the market, is more volatile in comparison. Due to this, the bull run or bear runs in the market tend to have more effects. Essentially, what we mean is that there are steeper charts in comparison. This makes the market require more tactics. If you are to invest in a luxury real estate market, then the possibility of gains and losses not only gets more prominent but also gives you a wider margin. 

However, as it can be seen, they are a double-edged sword. According to Marc Wallace, there was a 15% increase in the sale prices in January this year compared to the last one. Because of this uncertainty and volatility, the chances of suffering losses can be more damaging and long-lasting. It is, therefore, advised to only get involved in the market if the buyer can hold the property for a long time.

Why Invest in them then?

At first sight, it can seem a bit daunting to put your foot in a market that seems a bit unpredictable at first glance, however, in reality, luxury real estate can be a smart and stable investment. It all depends on the timing. 

Often enough, luxury real estates lead the market and can be used to predict the rest of the market. This is because of the close ties that exist between wealthy investors choosing to buy a luxury property and the economy of the market itself. The result of this is that if the average properties are on the market for an extended period, then chances are that the luxury market has already seen a turn. 

Coupled with this, is the fact that luxury real estate markets have less liquidity. This suggests that the premium market is less prone to resisting fluctuations due to which it returns to its normal rates faster. Essentially, despite the fluctuations, the median price points are more or less unchanged. This oddly makes the market a more stable option.

The Demand and Economics

In the last few years, the luxury market has outperformed the overall market by a massive margin, setting records for sales in places like Las Vegas. The reason for this is that economics has changed recently. One of these factors stems from the cryptocurrency gains, thereby increasing the financial situations of many. Buyers looking to achieve vertical mobility added to the increase in the luxury market

Additionally, banks have decreased their interest rates due to which the costs involved to get a mortgage have also seen a decrease. This has ultimately increased the demand for real estate as a whole. As a result, the thresholds for luxury prices have seen a significant increase, and it doesn’t look like there will be a stop to it any time soon. High demand coupled with the increase in prices has massively aided the market to hold the prices well.