EXECUTIVE SUMMARY

Q1 2022 $10M + NATIONAL MARKET REPORT

As thought leaders in ultra-luxury real estate, we are proud to present our very first National Market Report, the only report exclusively dedicated to the $10 million+ residential real estate market.

Over the last two and a half years, there have been profound, historic changes that have shifted markets across the nation. At each junction point, we at Bespoke have reported how these diverse changes have impacted our local markets of the Hamptons, New York City, and South Florida. However this year, as we delved into our analysis of 2022’s first quarter performance, we saw a grander picture reflected in the whole country, and felt compelled to fill the gap as the first report dedicated to exclusively covering the U.S.’s $10 million+ residential real estate market.

At a macro level, the massive increase in the first quarter of 2022 compared to 2021 can be understood as a serendipitous symbiosis of two crucial factors: high inflation and low interest rates. Backtracking to 2020, the economy did technically experience a brief recession with high unemployment, but it lasted only two months—the shortest in U.S. history. Even as the country came out of it, the recession’s impact was just long enough to bring interest rates to the floor by early 2021. Low interest rates, among other factors, led to much of last year’s $10 million+ real estate success, particularly towards the year’s end.

It is in this climate that we entered 2022, which incentivized both camps of $10 million+ homeowners: those trading in debt and those trading in cash. For the debt buyer, low interest rates saved them millions of dollars on $10 million+ properties (while interest rates started to creep up for the average consumer in Q1, UHNWIs’ transactional histories tend to enable them to secure discretionary rates). On top of that, increasing inflation means that the value of a fixed-price loan made in Q1 2022 will shrink as the dollar decreases in value over time, while the value of the actual home rises. For the cash buyer, inflation means their cash is losing value over time, and there are few better inflation hedges than a real estate investment.

The micro markets paint the details of this story. Across all states that had $10 million+ sales, there was a 41 percent increase in the number of homes sold compared to Q1 2021, from 346 to 488. Washington state had a 150 percent increase in trades, New York state had 105 percent, and Colorado had 57 percent. Looking at our alpha real estate markets, Hamptons trade volume doubled, from $242 million to $483 million. New York City went from 34 trades in Q1 2021 to 79 in Q1 2022. Florida bucked the typical trend of higher later-year performance across national markets, and in Q1 2022, surpassed quantity and volume of both Q1 and Q4 2021, with 144 trades, or $2.4 billion in sales in a single quarter.

In addition to the macro-economic trends the market’s facing, there’s an added, though much simpler, explanation for continued demand in the market: lack of supply. While there are increases in sales, there is not a proportional increase in new inventory. Take South Florida: in Q1 of 2021, turn-key sales made up about 64 percent of all trades, while new construction constituted about 24 percent; in Q1 2022, the proportions were about the same. In other words, the increase in trades is not because so many more ultra-luxury homes were being built that much faster. Rather, the demand for them was so high that homeowners found last year, and as it turns out, early 2022, the perfect time to sell.

Join us as we delve into the state of the national real estate market last quarter.

HOPE YOU ENJOY.

Cody Vichinsky

President, Bespoke Companies