After an interesting year in real estate across the globe, where do things stand for luxury real estate in the months ahead? To address this, Sotheby's International Realty compiled data from across the world for its inaugural Luxury Outlook Report.
As the leaders in global luxury real estate, our brokerage has comprehensive insight into how economic trends and social factors influence real estate decisions. The report examines high-end residential real estate markets in the wake of an unpredicted disruption to the global economy.
We can take the report a step further and look at its implications for Fort Worth luxury real estate. Overall, Fort Worth's real estate market has experienced high demand and increased interest in buyers, including high-end residential properties.
Overall conclusions for luxury real estate
The summary for the luxury market outlook in the coming months is that overall wealth is forecasted to grow. While certain pandemic trends will probably persist, high-net-worth individuals will continue to acquire wealth and take advantage of the unstable markets' opportunities. Some areas, like international investment in real estate, are likely to be stymied by persisting travel restrictions. As those lift, the market is expected to see a slow and steady rebound.
In terms of physical real estate, priorities have shifted. The demand for amenities has changed as we all needed larger homes with multiple offices and workspaces. The Luxury Outlook Report pinpointed some changes to spending habits and home buying trends. Generally speaking, the direction was for larger and more spacious homes.
The Luxury Outlook Report predicts that the S&P 500 index will end up 15% by the end of the year. There are certain to be some bumps and dips along the way, but the overall trajectory will be upward.
According to the Organization for Economic Co-operation and Development (OECD), the global gross domestic product will rise 4.2% in 2021 and 3.7% in 2022. Those combined increases make up for the overall 4.2% decline in wealth experienced in 2020.
As individuals move to start buying again, Forbes predicts high-net-worth individuals will be more conscientious about their spending. The financial impacts from the recession are likely to linger, either in-market performance, fragmentation of global trade, or consumer confidence.
Even if the markets return to their pre-2020 state by year's end, decision-making is likely to be more cautious.
Locally, the Fort Worth economy continues to recover. We have several Fortune 500 companies headquartered in our area. Our economy is diversified with a strong technology sector, which is helping it weather any recession.
Recent job growths showed employment rose 5.7% in February 2021, while the unemployment rate continued to decline. While the rebound has seen its ups and downs, overall recovery continues to be a slow and steady return to pre-February 2020 levels.
Real estate trends
The initial feeling when real estate activity slowed down during spring 2020 was the departure from dense urban centers would lead buyers to find better deals in big cities.
This wasn't necessarily the case. Luxury buyers were more likely to hold onto their properties rather than sell at a loss. High-net-worth individuals weathered the recession in their more spacious second or vacation homes.
As life returns to normal, housing experts predict there will still be a demand for urban living.
For those in the market for real estate, the biggest trend was towards roomier homes with more amenities. Expect the physical properties size to grow.
This plays well for Fort Worth real estate, as we have more spacious homes than other dense urban areas in the country. Our surrounding suburbs offer all the conveniences of a metropolitan lifestyle while still providing spacious yards and areas for outdoor recreation.
Another trend was more interest in updated homes with modern conveniences. High-net-worth individuals don't want to spend a lot of time doing renovations and rehabilitations. They want to move into homes ready to go so they can get on with their lifestyle.
Of course, one of the newest amenities in-demand is more office space. There's been a higher demand for what we call "Zoom" rooms. These spaces are supported by high connectivity yet are quiet and comfortable enough for virtual meetings. As our shift to a remote work lifestyle is more likely to be permanent, homes with offices remain in high demand for Fort Worth buyers.
Luxury kitchen amenities were on the rise. As we spend more time at home, spacious kitchens with professional features became essential to accommodate families and renewed interest in home cooking. In-demand features include smart appliances, steam ovens, quartz or Carrara marble countertops, and enhanced storage.
Luxury home prices
Demand for luxury housing went up at the end of 2020. This high demand is expected to be sustained and to drive price growth. Approximately 63% of luxury homes experts believe that home prices will rise in the next three years.
Around 48% of real estate agents working with residential luxury real estate say that local home prices will rise. This means for buyers seeking the best deal on a residential luxury property would be wise to buy now, especially if planning to finance some of your purchase.
As far as international competition, in the short-term international home investment is likely to stay down. As restrictions lift, the outlook is for international home investment to start resuming. The exact timing depends on factors more challenging to predict and prone to shift during the year.
Briggs Freeman Sotheby's analyzed how Fort Worth luxury real estate market performed throughout 2020. What we see echoes the findings of the Luxury Outlook Report. Overall, activity in the local luxury market and its home prices increased throughout the year.
Specific communities were of considerable interest to our luxury home buyers. Single-family home sales performed notably well in a few high-demand neighborhoods. For instance, the home price in Westlake rose 234% to $1.6M. Westover Hills, one of Fort Worth's wealthiest suburbs, saw its average price increase 45% to $1.25M.
The decisions luxury home buyers are making about their housing are experiencing a slight shift.
When it comes to second home decisions, the move is towards properties closer to their primary residence. For example, owning a home near downtown Fort Worth while owning a second vacation home in Eagle Mountain Lake. It's easily drivable and quick to access.
Part of the shift is remote work has enabled luxury buyers to take more extended vacations and breaks. Instead of a week here or there, they can head off to their vacation property for six weeks or more at a time. Staying close enables them to still "head into town" should the need arise.
Another shift is towards more new construction properties. Some of the older luxury properties aren't necessarily designed with modern amenities in mind. Purchasing an existing home might mean converting a movie theater into a home office or adding an addition. Why go through months of renovation when you can pick and choose what you want? Purchasing new construction enables the homebuyer to customize what they want in a home.
Luxury housing features
When it comes to what luxury home buyers want in their homes, some persistent key housing features are pinpointed by the Outlook reports.
The exterior space is receiving new priority. Luxury home buyers are paying attention to what the outdoor space looks like. Buyers want ample backyards that can accommodate the entire family's recreational needs. Interest in outdoor kitchens and patios is renewed. For high-rise and luxury condominiums buyers, the demand is for amenities like private outdoor spaces, such as a roof deck or spacious balcony.
The need for a place to focus on work has increased. However, not all luxury buyers necessarily want a home office. Some do want a workspace incorporated into their homes. But what if both home occupants need a dedicated area to focus on work and take calls? One trend is to have multiple home offices so various family members can focus on their separate work.
What about in shared buildings like luxury condominiums? Another trend is offering rentable office space as an amenity. Buyers use it as needed without the need to renovate or rethink their condo space.
Luxury buyers interested in condominium living are looking more at the amenities offered by these residences. The report highlights an interest in fitness centers that are more divided and have opportunities for a private workout space. Interest in concierge services was high, as the prior mentioned rentable office space and private roof decks.
In single-family luxury real estate, spacious kitchens became an amenity. With families at home all day, larger and more ample kitchen spaces were in demand. Increased kitchen sizes came due to our reduced time spent eating out and a renewed interest in home cooking. Homeowners looked for ample storage for their stockpile of goods and counter space for working on their cooking projects.
Fort Worth and Luxury Real Estate
Fort Worth has abundant opportunities for luxury home buyers to find exactly the lifestyle they are looking for. Buyers have access to spacious real estate opportunities, numerous outdoor recreation options, and urban amenities.
For that reason, we have been seeing many buyers from California, Illinois, and New York. These buyers are looking to take advantage of better tax opportunities and more spacious real estate for their investment.
In Briggs Freeman Sotheby's most recent data from the fourth quarter of 2020, we see significant increases at all price points in terms of median prices and the number of transactions.
Take a looked at how total closed sales performed in Q4 2020 by price point:
- $500-$700K– up 24%
- $700K-$1M– up 64%
- $1M-$2.5M– up 74%
- $2.5M+– up 567%
Such significant increases in the number of closed sales wouldn't be possible without high demand from luxury buyers. This is especially true in the ultra-luxury market, which did significantly well.
When we look at local neighborhoods are their activity, overall, we see year-over-year increases in sales activity and median prices. Most notable:
- While the Colonial Hills neighborhood's average price went down 1%, its listed inventory went fast, resulting in a closed sales increase of 60%.
- The exclusive community of Mira Vista reported 58% more in closed sales and a 5% increase in average sale prices.
- Westover Hills homes averaged $1.25M, up 45% year-over-year. Total sales rose by 57%.
Fort Worth's luxury real estate market's outlook in the near future is continued demand for homes. The initial outlook for 2021 real estate is continued constrained supply, even at the higher price points. We will have to watch what happens with the shift to remote work. If remote work lifestyles persist, the housing market will need to accommodate luxury buyers' demand for spacious homes that meet a remote workforce's demands.
Why Fort Worth for Luxury Real Estate?
Our first benefit lies in our home and property size. The various neighborhoods and suburbs of Fort Worth offer single-family residences with generous backyard space and home size. Overall, Fort Worth averages 1,660 sq ft for residential housing size, but many new construction properties average 2,166 sq ft. Of course, you can easily find larger residences in the different communities across the city.
For the luxury home buyer seeking room to roam, Texas is the place to be. Where else will you find ranches that sprawl hundreds and thousands of acres? Surrounding Fort Worth are numerous ranch and land properties ideal for a rustic getaway.
The Fort Worth area is also home to several significant lakes. Opportunities for waterfront living are found close to our urban center or within a short drive. Five urban lakes are within the city limits. Lake Worth is a short trip out of downtown and has abundant wildlife. Just 15 miles away, Eagle Mountain's 9,000 acres of pristine water are ideal for water sports of every kind. With Grapevine Lake, Benbrook Lake, and several more within an hour, Fort Worth's location is suitable for both primary and second residences.
Fort Worth residents have the added advantage of numerous nearby amenities. Several high-end communities offer championship golfing, such as the before mentioned Mira Vista and the highly desirable Rivercrest area. In total, 21 golf courses are available in Fort Worth, ranging from municipal to private courses.
Our miles of bicycle trails and walking paths are an asset. The interconnected pathways of the Trinity Trail system combine to make over 40 miles available for recreation. The trails wind through numerous metropolitan parks and alongside the Trinity River, increasing outdoor enjoyment opportunities.
Another reason Fort Worth is attracting so many buyers from Illinois and New York is our warm weather. Our mild winters or one of the reasons why Fort Worth is an excellent destination for retirement. There's no sense of being trapped inside when you can have a mild Fort Worth winter and still enjoy spending time outside.
While Texas has one of the highest property taxes in the nation, residents come out ahead compared to the total tax burden of other states. It's another driving factor behind why many of our friends from the North are making the move to Texas.
Finally, something that many luxury home buyers are looking for is a sense of community. That's not always apparent in some of the dense and crowded metropolitan cities.
Every Fort Worth neighborhood has a unique character. Residents are bonded together through our many homeowner and neighborhood associations. These groups strive to create a sense of community that many have been missing. Our HOAs and neighborhood associations put on events throughout the year.
The Big Picture for Luxury Real Estate
When it comes to luxury real estate, the outlook is positive. We expect high demand to persist here locally in Fort Worth. During 2020, we saw some incredible sales. Even more extraordinary properties are currently on the market for luxury buyers seeking the freedom a lifestyle north Texas can offer.
Let the experts at Chicotsky Real Estate Group assist with your home search. We use the latest technology to assist buyers in and out of state with their real estate search. Take advantage of our network and knowledge of Fort Worth to find the ideal luxury estate for you.