Corcoran Pacific Properties Hawaii Luxury Market Report JAN 2022

North American Luxury Review Long-Term Trends Defining the Luxury Market in 2022 Typically, in our January market report we take the time to review what occurred during the previous year and what to expect in the upcoming year.

This year, however, we are going to review three key trends, how and why they came to be, and why they could possibly shape the luxury real estate market in 2022 and beyond.

The luxury real estate market had an outstanding year in 2021, probably one of the strongest years with historic price increases in both the single family and attached markets, and sold properties recorded numbers above 2020 despite an unprecedented decline of inventory levels.

WILL INVENTORY LEVELS INCREASE? Inventory levels started to decrease in October/November 2020. However, what was different to typical years was that the level of sales did not decline, even in the attached market, which, during the first six to seven months of pandemic, had come close to a standstill. Equally, the level of new inventory entering the market was starting to show a serious differential against the level of sales.

The beginning of 2021 marked the start of a trend that came to affect the level of sales for the rest of the year. When the spring season arrived, the new inventory levels failed to reach typical levels and demand escalated to a frenzy. By July, the luxury market started to calm down, however as inventory levels hardly rose, sales still outpaced inventory. This trend continued and by the end of 2021, a significant number of markets have less than 50-70% inventory compared to the end of 2020.

What repercussions does this trend imply for 2022? Will we see another year of low inventory, quick sales, and increased prices? Let us look at a few changed parameters that may cool this red-hot market.