The culture and convenience of cities mean they have always been desirable places to own property, and that won’t change – especially as markets continue to normalize.
In 2020, one of the most transformative trends in the luxury real estate industry has been the mass movement of buyers from urban centers to suburban or vacation markets. It seemed like everyone was fleeing their condos in town to find more space, both indoors and outdoors.
Of course we know this is an over-simplification. Here in Vancouver, Canada, the downtown core has the potential to be the vibrant place he lived before the pandemic. The same applies to city centers around the world. The culture and convenience of cities mean they have always been desirable places to own and that won’t change – especially as markets continue to normalize.
The first quarter of 2020 looked like a boom year for luxury real estate, which made it all the worse as markets abruptly stalled in the second and third quarters. However, by July, companies had reopened with new safety protocols and people began to feel more comfortable when they resumed normal activities. The market showed renewed robustness up to the fourth quarter.
Therefore, luxury real estate agents shouldn’t prevent their buyers from buying property in the big city. In fact, there are four reasons why the first half of 2021 could prove to be a great time for those looking for a downtown property.
1. Lifestyle is still at the top of the customer wish list
If you live on the peninsula in downtown Vancouver, you can walk to many amazing places in fifteen minutes or less – from the beaches of English Bay to the forests of Stanley Park, from world-class shopping to your favorite coffee shop. Urban centers around the world offer similar excitement and diversity, and luxury customers won’t simply give that up. In a year from now, they will still want restaurants, bars, theaters and parks on their doorstep.
But the definition of luxury living has actually been influenced in the last year. If you live in a building with hundreds of units and suddenly the elevator capacity is limited to two people it is a liability. Nobody wants to queue up to take out their trash or get their groceries, nor do they want to compete for space in amenities like pools and gyms.
When you bring your buyers into town, remember that there are new opportunities to add value. Is the development you are showing sufficiently low? Does it have a 24-hour concierge service for door deliveries, including cold storage for items that need refrigeration? It is considerations like these that allow high-end customers to invest in urban real estate without compromise.
2. Change brings a window of opportunity
As mentioned earlier, 2020 was notable due to the significant city churn as people realized they needed more space than their one bedroom condos. Many people also started working remotely, which meant they no longer had to live near the office and could suddenly afford to move to a single family home outside of town.
But if everyone else is jerking, you can encourage your customers to jerk. With activity in markets outside the city center remaining high, it is likely that the average price for a single family home will rise over the next six months. Meanwhile, customers who have always dreamed of living downtown can enjoy a lack of competition that has been unprecedented in recent times.
3. Buyers may have more time
Now that downtown luxury inventory purchases have slowed slightly, buyers actually have time to think about making a purchase, do their due diligence, and really understand what the next five years will be like. Here in Vancouver, that hasn’t been the case for a few years – people used to be able to spend more time thinking about their next TV than about their next home.
As demand falls, sellers are more willing to negotiate, buyer’s dollars go up, and it is possible to offer your customers a favorable purchase price.
But that doesn’t mean it’s all bad news for luxury sellers, especially those in the upper end of the urban market. In the upper price ranges here in Vancouver, prices have not fluctuated significantly. Typically, the sellers at these premium residences are in no hurry to part with their properties and are content to wait for the market to recover.
4. The markets will find equilibrium
It is important to remember that the market will recover. When our team first worked together in 2008, global markets had just collapsed and our customers were panicking and trying to figure out their next course of action – much like they did last year. In both cases, it was our job to advise and reassure them that while market anomalies sometimes occur, normalcy is returning.
Panicked salespeople are motivated salespeople, but we must always warn against impulsive decisions. Luxury customers are demanding and know when they’re being exploited – and they won’t make the mistake of doing business with self-service agents. Provide the best information, know your product and market better than anyone, and be a trusted advisor.
Ultimately, we build our businesses on the basis of relationships. Invest in your current customers and even in a scenario where you don’t get a sale in town, pave the way for future business.
With a combined 45 years of experience, Will McKitka and Kevin Hardy know luxury real estate. They stand out from the 14,000 REALTORS in the greater Vancouver area in how they market their properties, how they serve their customers and how they present their expertise in today’s market. They have combined their in-depth knowledge of traditional and digital advertising with the distribution of the Sotheby’s International Realty brand.