Cindy Raney & Team - Trend Report 2022

Page 1

THE

trend

REPORT 2022

Perspective on the Market Ahead

CINDY RANEY & TEAM | THE TREND REPORT 2022 1
2 CINDY RANEY & TEAM | THE TREND REPORT 2022 355 Riverside Avenue | Westport, CT 06880 203.257.8320 | www.cindyraney.com | @cindyraneyandteam Westport | Fairfield/Southport | New Canaan | Darien | Greenwich | Weston

A Messagefrom Cindy

Cindy Raney & Team (CR&T) welcomes you to The Trend Report 2022: Perspective on the Market Ahead.

The Trend Report is one way we can provide you with important insights on anticipated real estate trends: both locally and globally. Because real estate doesn’t operate in a vacuum, it’s important to understand the relationship between global developments and their impact on local activity. How we connect the dots between the two is where we add our value.

As professional advisors, our job is to identify these trends to inform and guide your decisions for one of your most treasured assets: your home. It’s important to note that these insights are not just our own but also come from renowned sources including an exclusive Coldwell Banker Global Luxury/Censuswide survey, the Institute for Luxury Home Marketing, Wealth-X, and top industry experts.

Providing local expertise with a keen eye on national and international influences has been the foundation of our success since the formation of CR&T. Selling luxury real estate requires much more than pricing and staging a home. It requires a deep understanding of trends, sophisticated market knowledge, a passion for delivering personal service, and the ability to reach affluent buyers across the globe. That is why, in building our hand-picked team, we have created an exceptional experience for our clients, with results that consistently outperform the market.

Our goal of providing local expertise and global reach is showcased in this comprehensive report. It reflects our commitment to staying at the forefront of trends, insights, and shifts in the luxury real estate market across Fairfield County and beyond.

We hope you enjoy The Trend Report as much as we enjoyed delivering it to you.

CINDY RANEY & TEAM | THE TREND REPORT 2022 3
15 23 31 37 43 49 50
in Perspective Trend 1: An Unconventional Buyer's Market Trend 2: Searching for Stability
Moving Beyond Borders
Creative Financing
for the Future Resources and Disclaimer 5 Executive Summary Table of Contents 4 CINDY RANEY & TEAM | THE TREND REPORT 2022
Market
Trend 3:
Trend 4:
Perspective

Executive Summary

• National Luxury Real Estate Transitioning, while Fairfield County remains Strong. The luxury property sector is showing signs of a reset following an unprecedented homebuying boom during 2020 and 2021. Emerging from the pandemic, highnet-worth buyers have shifted their focus. Rising interest rates, inflation, and increasing economic uncertainty have also softened demand from 2021. Despite the headwinds national markets are seeing, Fairfield County luxury real estate remains in demand.

• Real Estate as a long-term Investment. The high-end real estate market is still in a strong position for 2022 and 2023. Luxury single-family home prices have seen 60% appreciation since 2017 while luxury attached home prices increased nearly 41%. According to a survey of over 2,000 U.S.-based affluent individuals conducted by Censuswide and the Coldwell Banker Global Luxury program, four in five (80%) affluent respondents believe that real estate is a safe investment.

• Market remains favorable to Sellers. The majority of luxury home markets analyzed for The Trend Report were seller’s markets as of October 2022 – but conditions are gradually shifting towards more of a buyer’s market. While conditions are shifting nationally, in Fairfield County, sellers still have the upper hand based on supply and demand (i.e., limited inventory).

• Seeking Stability. The wealthy may be gravitating toward real estate that gives them financial, emotional, or psychological stability in the face of rising uncertainty. They’ll be looking to diversify their real estate portfolios, create long-term generational wealth, make opportunistic buys in traditional luxury centers or seek properties in locations less affected by climate change and extreme weather.

• Global Property Buying is Back. The affluent are returning to global property buying. About 92% of U.S.-based respondents are now considering purchasing a property abroad. A strong U.S. dollar, rising cost of living, surging home prices, and political climate at home are among the chief reasons for their interest overseas.

• High-Net-Worth Hedging Set to Grow. The newly minted millionaires of the last two years are not only diversifying their real estate assets, but also looking to lessen their exposure to higher interest rates in the short-term by using cash and other creative financing options to purchase homes.

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Who You Choose to Represent You Matters

Cindy Raney & Team is an elite,

luxury real estate boutique in Fairfield County. Based in Westport, they are Coldwell Banker's #1 Small Team in Fairfield County with over half a billion in luxury property sales.

6 CINDY RANEY & TEAM | THE TREND REPORT 2022

Cindy Raney & Team Advantage

Founded by Cindy Raney, who has earned the distinction of a Top 1% agent nationally, Cindy Raney & Team (CR&T) is a comprehensive team of professionals who are 100% focused on providing an exceptional client experience throughout the home buying and selling process.

To be part of CR&T means sharing Cindy’s vision and dedication to fulfilling clients’ real estate needs and requirements with the highest level of professionalism.

CR&T use their varied backgrounds and experience to be leaders in their market, with specialties including, but not limited to, the purchase and sale of luxury properties including corporate and private relocations, vacation homes, and investment properties.

As long standing residents, CR&T provide invaluable and intimate insights into Fairfield County. They focus on meeting their client’s needs at every stage of their life and take great pleasure in being both an on-going resource and asset even after the transaction is complete. As trusted advisors, they remain current on the latest developments, not simply in their market but, in the larger realm of macroeconomics, global fund flows, technological and legal innovation and consumer trends, understanding the importance of global influences.

With a focus on enhancing the client experience, CR&T sets new standards in innovation, customer service, and the use of technology. They fully use their remarkable knowledge of traditional and digital media to optimize exposure for sellers and provide comprehensive data and analytics for buyers. They leverage the power of technology and social media, in conjunction with their marketing team, to effectively market and sell properties.

Homes are promoted through unparalleled marketing materials that set them apart and position them to the most qualified buyers. From a proprietary property website to an optimized social media campaign that includes robust PR and media coverage. CR&T utilize the highest quality design, technology, and information to market properties. They constantly analyze data to ensure that the marketing approach is effective and shift their tactics accordingly to keep their clients’ properties highly visible.

Only a seasoned agent understands the complexities of a real estate transaction. CR&T have extensive experience negotiating offers and are always analyzing current market trends to help their clients outperform the market. Leveraging their well-established relationships within the real estate community gives their sellers the advantage of engaging with serious buyers, allowing CR&T to close deals quickly and efficiently.

It is these core values that ensures CR&T exceeds industry averages, their competitors’ performances and most importantly their clients’ expectations.

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GREENWICH

WES TP OR T NEW C ANAAN DA RIEN

WES TO N southp or t

FAIRFIELD

Specializing in Fairfield County’s Luxury Markets

8 CINDY RANEY & TEAM | THE TREND REPORT 2022
CINDY RANEY & TEAM | THE TREND REPORT 2022 9
the Team
Founder,
Specialist margaret buddenhagen Client Relations ginny moffitt Realtor® Adrienne Schoetz Transaction Director linda schwartz Realtor® jason H. mudd Managing Partner talia rossman Marketing Manager Tara Chlupsa Realtor® megan donofrio Realtor® william bunn Realtor®
Meet
cindy raney
Global Luxury

Unmatched Knowledge & Representation

The success of Cindy Raney & Team (CR&T) is due to their outstanding knowledge of the luxury market within Fairfield County and the ability to match buyers and sellers throughout its numerous diverse and unique communities.

They back this knowledge up through their incredible work ethic, a network of local and global resources and exceptional marketing strategies.

Here are a few of the comments recent clients have to say about CR&T:

Cindy and her team are phenomenal. They’re extremely organized and have an exceptional sense of the real estate market and its direction.

When looking for a home, along with a complete change of lifestyle, the three most important things needed from a broker (in our opinion, at least) are knowledge, availability, and most of all, patience.

Cindy over qualifies in all the above requirements. She is very realistic, extremely organized and, most importantly, very understanding –always taking in her clients’ needs, wants, and abilities in purchasing a home.

It took almost two years to find the right home to relocate a family of five from a New York City apartment to a one-acre, 5,000+ square foot home in Westport, CT. We never felt alone or rushed in our search and decision making.

Cindy is confident and optimistic. As we agreed on our ideal home and property, her thoroughness (with the help of a wellstaffed and trained team, Margaret and Adrienne, to name a few) and efficiency in closing were flawless.

We definitely recommend Cindy Raney & Team without any reservation. Cindy is not only a Broker but has now become a lifelong friend. Thank you again for everything. (We continue to ask questions/referrals after our move and they are always there to help!)”

10 CINDY RANEY & TEAM | THE TREND REPORT 2022
67 OLD HILL ROAD | WESTPORT, CT Cindy Raney & Team Represented the Buyer – $2,300,000

Cindy, thank you so much for all your hard work. I so appreciate all your hard work. Please extend my sincere gratitude to your entire team. They were true professionals and a pleasure to work with. Living on 4 continents has made multiple home transitions for us to manage. They are never easy but I can say without hesitation that you provided us with a very positive and meaningful experience. While market trends will always drive a buyer’s/seller’s rate, having an agent that is honest, authentic and invested in meeting your needs within the scope of the market is what truly makes the difference. Thank you for being supportive, respectful and driven. Your efforts to stay up to date with market trends and make the detailed small adjustments as needed are so valuable. We appreciate all you did to support a smooth and respectful transaction that left all parties feeling valued and taken care of. We look forward to working with you again in the future.”

Cindy, Margaret, and the rest of the Cindy Raney Team are absolutely exceptional. They sold our Fairfield house in the beach area this year and were complete pros from start to finish: meticulous research to ensure the right pricing, always fast to react and respond to our thoughts and questions, created an attractive, creative marketing campaign, provided thoughtful advice throughout the sale process, and handled negotiations professionally and with transparency to close the deal. I enthusiastically recommend Cindy & Team!”

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349 BEACH ROAD | FAIRFIELD, CT Cindy Raney & Team Represented the Seller – $2,495,000 62 MEADOWRIDGE ROAD | SOUTHPORT, CT Cindy Raney & Team Represented the Seller – $2,350,000

Power in Numbers

The Coldwell Banker® brand is a true global force, with the power to showcase exceptional properties and reach affluent buyers around the world. Through a master franchise network located in 41 countries, we are able to provide unmatched exposure for our clients’ properties.

12 CINDY RANEY & TEAM | THE TREND REPORT 2022 100,000+ 2,900 41 Agents Offices Countries & Territories

Strategic Property Marketing

CR&T has partnered with Coldwell Banker Global Luxury® to provide an unmatched selling experience for their clients. This partnership provides their clients with access to the most powerful global network in real estate. Coupled with their longstanding relationships in Fairfield County, New York City, and beyond, their clients’ properties will get unmatched exposure worldwide and locally to the most qualified buyers.

The Coldwell Banker Global Luxury® program redefines the world of luxury real estate marketing. The prestige of the Coldwell Banker® name, combined with state-of-the-art technology, bespoke marketing strategies and one of real estate’s most robust global networks encompassing 100,000 independent sales and associates in 41 countries and territories, culminates in extraordinary representation that crosses oceans, continents and language barriers. In 2021, members of Coldwell Banker Global Luxury® achieved tremendous results selling $267M in luxury properties each day.

TARGETED ADVERTISING

Targeted wealth marketing to the world’s most affluent individuals through an exclusive relationship with WealthEngine

GLOBAL EXPOSURE

Powerful global network to provide extensive exposure for listings around the world

EXCLUSIVE TARGET INSIGHTS

Access to exclusive luxury market intelligence and metrics

UNPARALLELED QUALITY MARKETING

Exceptional property marketing designed to attract attention and showcase the home’s most distinctive qualities

• COMPREHENSIVE STRATEGY

Comprehensive marketing strategy and exclusive resources to ensure a property is seen by the widest possible audience of qualified buyers

• IN-HOUSE PRESS TEAM

Influential media relationships with top-tier outlets such as The New York Times, The Wall Street Journal, Forbes, and CNBC

PROMINENT ONLINE PRESENCE

Immediate syndication through a comprehensive network of prominent real estate websites

CINDY RANEY & TEAM | THE TREND REPORT 2022 13
The Cindy Raney & Team | Coldwell Banker Global Luxury® Advantage
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1111 SASCO HILL ROAD Sold for $6,200,000 by Cindy Raney & Team

MARKET IN PERSPECTIVE

Founder,

How do you analyze a market that’s in a state of flux?

Typical real estate analysis is based on year-to-year comparables. But by any measure, 2021 was a year without precedent. Mass wealth creation and lifestyle changes during the pandemic spurred a once-in-a-generation homebuying boom characterized by rapid sales, bidding wars, and record price appreciation. Now the luxury property market is transitioning, making it nearly impossible to predict.

Backdrop of Uncertainty

Uncertainty has been a theme in 2022. Questions have swirled about whether the U.S. economy is slowing or not. The Federal Reserve has spent the year hiking interest rates to curb inflation. Borrowing costs are now at the highest they’ve been since 2008.¹ Geopolitical events, such as the war in Ukraine and its resulting energy crisis, have begun to impact some markets globally. High-net-worth individuals, while more insulated from economic downturns than the general population, are a naturally cautious bunch and have begun to temper their homebuying compared to 2021.

These factors are all playing out now in high-end markets across the U.S. to varying degrees. The data varies widely between locations, price points, and property types, muddying the forecast waters. Are we in a buyer’s market? Are we in a seller’s market? A lot of it depends on where you look, and what you are looking at.

Trending Toward Balance

Across the U.S. we can see that the pendulum is swinging toward balance – although data in many luxury markets still show a seller’s market – because overall the sales ratio is decreasing month-over-month. This does hold true in Fairfield County although to a lesser extent as the sales ratio decrease is occurring at a much slower rate.

SALES RATIOS EXPLAINED

Sales ratio measures the monthly sales against the remaining active listings at the end of each month.

21% or greater is a SELLER’S MARKET, less than 21% to 15% is a BALANCED MARKET and 15% or below is a BUYER'S MARKET.

Source: Institute for Luxury Home Marketing

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See page 51 for a full list of resources.

2022 in context

While 2022 market statistics show declining sales and increasing inventory compared to 2021, these numbers need to be put in context. As previously noted, 2021 was an extraordinary year, and that level of feverish buying activity is unlikely to be repeated in our lifetime, so any comparative study will automatically distort the picture unless we compare it to a more traditional and stable year.

In comparison to the years of 2017 - 2019 – more benchmark years – the available inventory in 2022 is actually significantly lower, sales are higher and price points remain at an all-time high. However, unlike our benchmark years there is an important difference: there is a hesitancy from both buyers and sellers in the market. There has been a marked decrease in the level of new inventory available as sellers are unsure whether they will find a new home once they sell, the continued interest rate hikes have

added a cost factor that may not be justifiable if the purchase is a ‘want’ rather than a ‘need’, and a lot of negative speculation has buyers uncertain about home values in the near future.

Fairfield County in Perspective

The luxury home market in Fairfield County certainly benefited from the pandemic insomuch as it quickly became a destination for affluent buyers wishing to escape the big metropolises of New York City and Boston. Previously Fairfield County had been a market where home values were significantly lower than comparative markets, but suddenly it saw a 12.9% increase in value from 2019 to 2020 and an overall increase of 66.2% as of October 2022.

Individual luxury markets located within Fairfield County show similar growth over the last two plus years with prices still seeing the upward pressure of low supply and high demand.

16 CINDY RANEY & TEAM | THE TREND REPORT 2022
23 BAYBERRY LANE Sold for $2,845,000 by Cindy Raney & Team

2022

$4,430,000

$4,200,000

1,624 -37.4% -38.0% -47.5% -37.7% -40.2% -4.1% -26.3%

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Inventory
Solds
Sold Price
DARIEN Total Inventory Total Solds Median Sold Price 2019 2022 YTD Change $3,155,000 30 87
25 52 GREENWICH Total Inventory Total Solds Median Sold Price 2019 2022 YTD Change $6,200,000 51 169 $7,151,000 56 162 NEW CANAAN Total Inventory Total Solds Median Sold Price 2019 2022 YTD Change $2,800,000 31 122
21 76 WESTPORT Total Inventory Total Solds Median Sold Price 2019
YTD
Change
FAIRFIELD COUNTY Total 38 158
Total 40 98 WESTON Total Inventory Total Solds Median Sold Price 2019 2022 YTD Change $1,457,500 19 57
Median 23 42 FAIRFIELD/SOUTHPORT Total Inventory Total Solds Median Sold Price 2019 2022 YTD Change $1,437,500 99 299 $2,125,000 83 157 Note: Based on transactions and data from January to October 2022 vs. the same period in 2019. Source: Institute for Luxury Home Marketing
2019 2022 YTD
% Change $1,925,000 974 2,594
$3,200,000 66.2% 77.0% 47.8% 58.2% 33.1% 15.3% 78.4%
813 -16.5% 5.3% -16.2% -32.3% -16.7% 9.8% 21.1%
%
$2,882,000
$5,100,000
$2,600,000
Luxury Markets in Fairfield County

The data for the last quarter of 2022 already indicates that all Fairfield County’s luxury markets are in flux with the cause mainly due to a lack of new inventory entering the market. As interest rates rose those who do not need to sell or were concerned about a lack of properties for sale added to a supply issue, by simply not putting their homes on the market either.

The luxury market is still busy, perhaps not in comparison to the same time last year, but because the lack of inventory is creating an urgency for those who ‘need’ to buy a home. There are still homes, especially in the $2-4 million range that are seeing offers over the asking price, but that propensity is starting to diminish.

Certainly, homes that are priced at market value are more than likely to sell for their asking price, as there is little sticker shock from buyers about current price levels even though they are significantly higher than last year.

While the number of sales has decreased, which initially may indicate a decrease in demand, the cause is actually a result of the decline of available homes in the high demand price bands coupled with a lack of new inventory. Looking at the sold price to list price ratio percentage, which is currently at 101.6%, coupled with the continued decline in the number of days a property stays on the market, are both strong indicators that demand is still high.

While the quantity of buyers may have fallen – mostly from those who are feeling the effects of the volatility of the stock market – the fact that Fairfield County is seeing over 35% of its buyers relocating from New York City or outside the state, coupled with the low level of homes for sale, actually translates into a market in favor of the seller, with very strong buyer pool who need to buy a home.

These buyers are attracted to Fairfield County for numerous reasons, including but not limited to, the desire to find a home that offers a lifestyle away from the city, yet is only a short commute, a location that offers everything from the arts to outdoor activities,

the charm of county/village life to resort-like beach towns, not to mention the depth of quality schools and new job opportunities.

It would seem that the demand to live in Fairfield County has taken on a force of its own, attracting all age groups. Not only are they looking to take advantage of its many amenities but because it offers core values of safety, security, community and is little affected by the impacts of climate change.

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272 FAIRFIELD BEACH ROAD Sold for $2,855,000 by Cindy Raney & Team

The Great Reconciliation

If 2020 was the year of resilience, then 2021 was the year of reconciliation. Once the pandemic’s duration made it less likely that people would bounce back from the pandemic unchanged, people began to redefine what the “next normal” looked like. The hallmarks of 2020 – the frantic search for more space and safe havens, mass migrations out of the city and FOMO-meets-YOLO mind-sets – gradually settled into realigned lifestyles and values. People began to focus on what matters most to them: family, health, home and all of the things that connect them to purpose, happiness and overall well-being.

The expectation is that the profound lifestyle and cultural changes that occurred throughout 2020 and 2021 due to the pandemic will be deep and lasting. How we choose to live with a virus that continues to mutate and evolve will ultimately define us as humans and as members of our communities. Even if COVID-19 fades into the background and eventually turns endemic (which it is largely expected to do sometime this year or next), our patterns for living have been permanently transformed for generations to come.

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165 HUBBELL LANE Sold for $2,250,000 by Cindy Raney & Team

The Big Picture

Despite the headlines, the luxury property market is still in a strong position.

Stock markets may have fallen by 20% in 2022,² reducing the overall wealth of individuals with a net worth of over $5 million by 12% from 2021, per Wealth-X. But stock volatility could actually push the affluent investor toward real estate. After all, people frequently want to buy tangible assets as opposed to stocks or bonds during challenging economic times.

The latest figures from Wealth-X also reveal a silver lining if you understand the data. While it looks like real estate asset allocation has remained unchanged from 2021 to 2022, most of the loss can be attributed to stock options, such as REITs, rather than bricks and mortar real estate.

The survey of high-net-worth individuals that the Coldwell Banker Global Luxury program undertook in collaboration with Censuswide also reinforces their reliance on real estate for overall wealth building and investment. Nearly 80% of them agreed that real estate is a safe investment.

80%

of Respondents

Agreed Real Estate is a Safe Investment

20 CINDY RANEY & TEAM | THE TREND REPORT 2022
96 LAUREL BROOK LANE
See page 51 for a full list of resources.
Sold for $3,700,000 by Cindy Raney & Team

Population Increase

Perhaps many of them recognize that real estate consistently increases in value over time. Their homes today are worth more than they were a year ago. All of this not only emphasizes the underlying strength of the luxury property segment, but also how much the affluent are willing to play the long game when it comes

to their lifestyle and real estate investments today. They may not see the same record profits as they saw in 2021, but over the next few years, prices are expected to appreciate. There is still great opportunity awaiting luxury homebuyers and sellers.

House Price Appreciation

the next chapter

To help us sort through a market that appears to be rapidly shifting direction after two unprecedented years of homebuying, we called upon a range of experts for this report. We talked to mortgage insiders and wealth advisors, as well as luxury real estate veterans around the globe. They helped us uncover four trends that will guide the next few years. Together with the Censuswide/

Coldwell Banker Global Luxury survey and the collected real estate data from the Institute for Luxury Home Marketing, their insights offer a rare glimpse into the minds of today’s affluent consumers and a barometer on what will be driving luxury real estate decisions in the near future.

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Freddie Mac
2010-2023 *Source: Wealth-X Wealth Growth 7.9% 10.3% $92,116B $32,425B % Change % Change Est. Totals Est. Totals GLOBAL U.S.
Real Estate Ownership Projected Wealth and Real Estate Asset Allocation for 2022 8.1% 10.7% 4,627,200 1,725,085 0.0% 0.0% $13,307B $4,515B
-4.9% -3.1% 6.3% 8.9% 4.9% 6.1% 6.4% 7.2% 5.1% 4.2% 11.3% 17.8% 10.4% 5.0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022* 2023*
22 CINDY RANEY & TEAM | THE TREND REPORT 2022
272 FAIRFIELD BEACH ROAD Sold for $2,855,000 by Cindy Raney & Team

AN UNCONVENTIONAL MARKET

buyer’s

A new kind of buyer’s market is taking shape in luxury real estate. A mixed set of factors has created a unique situation for affluent buyers where they are gaining negotiating ground yet still have to contend with low inventory and high prices.

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Historic Housing Boom Winds Down

After two heated years of rising home prices and demand combined with record low inventory, the housing market may be headed for a cooldown. As the Federal Reserve went into inflation-fighting mode this year, mortgage rates have risen faster than they have in a decade.¹ Some affluent buyers –despite being more insulated from economic downturns than the average buyer – have taken notice, either adjusting their buying strategies or putting the brakes on their homebuying plans as they take a watch-and-wait approach.

This notable shift began to take shape in June 2022 as inventory levels for luxury homes notched up for the first time in two years. With more properties to choose from and less competition, affluent buyers are finally feeling the pressure ease. Fewer properties are also selling for over asking, although prices remain high.

There are other signs that the property market has started to loosen for buyers.

Home sales have started to decline comparatively year-over-year and the rate of price increases has slowed. According to Freddie Mac, home value increases are expected to slow down from 17.8% in 2021 to 10.4% by the end of 2022.²

This improving set of market conditions has begun to open the door for buyers this year.

Inventory and Sales 2021 vs. 2022

24 CINDY RANEY & TEAM | THE TREND REPORT 2022 0 5, 000 10 ,000 15 ,000 20 ,000 25 ,000 30 ,000 35 ,000 40 ,000 45 ,000 January FebruaryM arch AprilM ay J une July A ugust Inventory 2021 Sales 2021 Sales 2022 Inventory 2022 Source: Institute for Luxury Home Marketing
See page 51 for a full list of resources.

Still Not Your Traditional Buyer's Market

While key indicators such as slowing demand and more inventory signal the start of a buyer’s market trend, the current state of the luxury real estate market is more contradictory.

Inventory is still not keeping up with demand. In Fairfield County supply is below the 10-year average seen prior to the start of the pandemic. While inventory levels initially seem to have increased by as much as 50% as of October 2022, this is due to inventory staying on the market for longer periods. New inventory entering the market which has dropped month over month by as much as 35% since May and June 2022.

This decline could be a result of the affluent taking the summer to travel again, or it could signal seller hesitancy about listing their home amid less favorable conditions. Some sellers may also just not be ready to move again, especially if they were among the group of early YOLO (“You Only Live Once”) buyers who purchased their dream home during the pandemic. Per the survey, over 72% of

respondents stated that they were satisfied with their home purchase in 2020 and 2021.

Equally atypical of a buyer’s market is price stabilization. Luxury property prices, while at record highs, have held and are even predicted to rise over the next five years3 (with the exception of some overinflated markets). Furthermore, these influencing factors vary considerably across the country,4 by location as well as by property type.

This creates a unique set of market conditions for buyers to navigate; they may have increasingly more negotiating leverage, but equally they will still need to contend with tight inventory conditions and high prices.

An Unconventional Buyer’s Market

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See page 51 for a full list of resources.
A traditional buyer's market occurs when supply exceeds demand.
Less speculation Low inventory High prices More negotiating power for buyers Fewer properties selling for over asking price Fewer purchases without contingencies Fewer multiple offers
96 LAUREL BROOK LANE Sold for $3,700,000 by Cindy Raney & Team

Not All Luxury Is Equal

It is important to note that not all luxury markets are exhibiting the same conditions. The majority of single-family home markets analyzed were still considered seller's markets.

For example: All of the local markets within Fairfield County are currently seller’s markets for luxury real estate, as is the whole County. In fact, comparative to other luxury markets, across the U.S., Fairfield County is showing that it continues to be one of the strongest markets – even outperforming some of the markets that are seeing an upward demand trend.

Patterns are shifting though and closer on closer inspection Darien, Greenwich, and New Canaan show a transitional phase with the sales ratio trending down. Whereas Weston, Fairfield/ Southport, and Westport’s sales ratio has remained comparatively static, with Westport showing the least movement.

All indications are for homeowners in Fairfield County wishing to sell in the current market, there is still a high demand for luxury properties and the conditions remain favorable to them.

Transitional – Seller to Buyer Transitional – Balanced to Buyer Transitional – Seller to Balanced Stable Seller's Market – Demand Trending Down Stable Seller's Market – Demand Static Transitional – Balanced to Seller Strong Seller's Market – Demand Trending Up

To demonstrate varying market statuses and the direction they’re shifting, sales ratio was analyzed in 21 single-family markets from January to April vs. May to August 2022. Sales ratio measures the monthly sales against the remaining active listings at the end of each month. If the sales ratio is 15% or less, it is a buyer’s market. If it is greater than 15% and less than 21% it is a balanced market. Over 21% it is a seller’s market.

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s t Fa v o r a b le to Buy e r s
F a v o r ab l e t o S el l e r s
Source: Institute for Luxury Home Marketing
Mo
30. 0% 11. 6% Coeur d’Alene, I D 20.6% 13.3% Miami, FL 20.0% 8.5% LakeTahoe, NV 17.6% 6.7% ParkCity,UT 13.0% 5.9% ParadiseValley,AZ 50.1% 19.9% LasVegas,NV 44.7% 19.8% HiltonHead,SC 37.2% 17.5% Island of Hawaii 74.6% 48.1% Darien, CT 57.6% 34.6% Greenwich, CT 50.6% 27.6% New Canaan, CT 62.8% 54.8% Weston, CT 64.2% 52.9% Fairfield/Southport , CT 43.0% 40.8% Westport , CT 17.5% 21.1% NassauCounty , NY 16.7% 25.2% SanAntonio , TX 19.5% 30.9% Washington , DC 97 .4% 108 .9% S t .Loui s ,MO 30 .1% 46 .3% Great er Boston , MA 2 5 .2% 4 6 .2% Most
C i n cinnat i , O H 30. 4% 13. 6% Santa Barbara, CA
Markets in Flux by Sales Ratio

Recalibrating Expectations

Some affluent consumers entering the homebuying scene in 2022 and 2023 may be recalibrating their expectations to account for new market conditions.

While inventory levels for larger footprints remain below prepandemic levels, smaller properties have seen a steady increase of availability month-over-month since April 2022, opening up this category of the market.

WANT VS. NEED

The want versus need dynamic appears to be at play for many affluent buyers. Since the inventory level for properties under 3,500 square feet is rising, buyers simply have more housing options to choose from in this category compared to the very high end of the market, where inventory remains low.

Choosing to step down a level in price not only allows them more options but the ability to get a foothold in their desired location.

Since the affluent tend to be more insulated from economic variants than the general population, current market dynamics may cause them to wait for their dream home while also mitigating their exposure to higher interest rates or a potential economic downturn.

CINDY RANEY & TEAM | THE TREND REPORT 2022 27
27 MAPLE AVENUE N Sold for $2,710,000 by Cindy Raney & Team

Mass Affluent vs. Ultra Affluent

A mixed dynamic can also be seen across luxury home price segments. In the top 10% of the market or the “mass affluent” sector, buyers tend to be more rate-sensitive and may be holding off on big-ticket purchases (like houses) in the short-term to see how the economy lands with inflation. In the top 5% of the market, however, purchasing might have slowed for slightly different reasons. With the pressures of the pandemic largely behind them and abundant cash reserves, ultra-wealthy individuals may be able to take their time to find the perfect home but are finding that their choice of desirable properties is severely limited.

“I have multiple buyers looking to purchase a luxury water view home in Fairfield County,” shared Raney, where prices for water view properties frequently top the $5 million mark. “They are ready to pay a premium to secure the property of their dreams, but we simply have very few homes for sale that fit their criteria.”

Lack of desirable inventory has plagued several other well-known ultra-luxury property markets, including New York City and Aspen. Properties valued in the Top 5% of the market saw very little change in their inventory levels during the first ten months of 2022, compared to the same period in 2021. If there was a slight increase in inventory, there was frequently a corresponding increase in sales.

Not all ultra-wealthy buyers are waiting on the sidelines to make their move, however. Some are willing to purchase smaller properties to secure a foothold in the right location. While the mass affluent tend to be more strategic in their buying as they weigh the costs of selling, buying, and financing, ultra-wealthy individuals’ deep pockets allow them to make decisions to suit their current requirements.

28 CINDY RANEY & TEAM | THE TREND REPORT 2022 Fairfield/Southport 8 4 13 3 Weston 0 0 1 1 Westport 34 11 52 21
LOCATION TOTAL INVENTORY TOTAL SOLDS Properties Valued $5 Million+ 2021 2022 Greenwich 187 107 205 85 Darien 13 7 14 6 New Canaan 13 4 24 6 2021 2022 Note: Based on data between January and October 2022 compared to the same period in 2021. Source: Institute for Luxury Home Marketing 165 HUBBELL LANE Sold for $2,250,000 by Cindy Raney & Team

Affluent Buyers Remain Bullish

Regardless of an affluent buyer’s financial profile, there is still significant confidence in the luxury real estate market.

According to the survey, nearly 90% of respondents believe in the stability of owning property. Even if some buyers have dropped out of the real estate game due to fatigue, frustration, or even hesitation this year, they may be primed to return as inventory levels improve.

“The reality is, we are coming out of one of the best real estate markets in history,” said Jason Mudd, Managing Partner of CR&T. “But that level of demand and price appreciation wasn’t sustainable. The difference between the last two years and today is that prices are not going up 20% every year. Instead, they may rise 5% a year. That’s still a really good market.”

PUTTIN G IT IN PE R SPECTIVE

9 in 10 Almost

high-net-worth respondents think that the real estate market in 2023 will be better or the same as 2022 for investment.

40%

of respondents who are planning a home purchase in the future plan to do so in 1-3 years.

It’s important to look beyond one or two annual data points to have a complete understanding of what this new kind of buyer’s market will mean for buyers and sellers alike. A more nuanced view of local markets and varying luxury price segments is needed. And one cannot discount the bullish sense of optimism among affluent buyers as they navigate these new dynamics.

While the luxury home market may be in flux as it finds its footing after two years of soaring prices and demand, the overall market fundamentals are historically strong. The law of supply and demand applies. With luxury housing supply still low in many markets across the U.S., home prices are expected to remain stable. At the end of the day, people of certain means prioritize their surroundings, choosing to live where and how they wish. In periods of great market volatility, the tangible and enduring value of real estate often holds even greater appeal.

CINDY RANEY & TEAM | THE TREND REPORT 2022 29
M. RYAN GORMAN, Chief Operating Officer, Coldwell Banker Real Estate LLC
30 CINDY RANEY & TEAM | THE TREND REPORT 2022 1111 SASCO ROAD Sold for $6,200,000 by Cindy Raney & Team

Increasing numbers of the affluent appear to be gravitating toward real estate to create financial, emotional, and psychological stability. They view real estate as a proven long-term investment that can also generate income, as well as create generational wealth for their families. With the pandemic largely behind them, they’re primed to return to traditional luxury epicenters known to hold their long-term value. Some will also begin seeking out property in areas less affected by climate change in the years ahead.

CINDY RANEY & TEAM | THE TREND REPORT 2022 31
stability
SEARCHING FOR

Two Years of Yolo

During the pandemic, affluent homeowners shifted to a new form of fearlessness. Telling themselves, “Life is short…what are we waiting for?,” they were buying up big dream properties or second homes in dream locations for the present moment.

This mindset is shifting. Between rising economic uncertainty, stock and crypto market volatility, climate change, and two years of living through an unprecedented health crisis, wealthy buyers have begun turning toward opportunities that give them longterm financial security and quality of life.

An Investment Proven To Hold Its Value

Prone to behaving cautiously, the affluent have begun to signal that they are looking for more stable long-term investments to protect their wealth and give them peace of mind. Real estate has always been one of Americans’ favorite long-term wealth-building assets –and it shows in the survey.

Over a third of survey respondents believe real estate to be the safest long-term investment, ranking it higher than company shares, stocks and bonds, cryptocurrency, and pensions. And they are willing to put their money where their belief is because over 75% of them own at least one investment property.

LONG-TERM SECURITY

Real estate generally offers reliability and stability for those investors who are able to play the long game: hold onto their asset when the market trends down and wait until prices start to rise again.

32 CINDY RANEY & TEAM | THE TREND REPORT 2022
$1,376,529 $1,397,666 $1,627,250
20 17 2018 2019 2020 2021 2022 Source: Institute for Luxury Home Marketing
$1,668,750 $1,943,750 $2,212,500
Luxury Single-Family Median Sold Prices 2017-2022 Top 50 U.S. Luxury Markets 349 BEACH ROAD Sold for $2,495,000 by Cindy Raney & Team

Low Inventory Meets Price Stability

Even though inventory is beginning to rise across many luxury markets this year, the increases are not expected to be enough to bring prices down significantly any time soon. Inventory levels in the U.S. are still below 10-year averages¹ reported prior to the start of the pandemic – and not likely enough to relieve the massive housing shortage. Land also remains scarce.

With home ownership so central to the American mythos and interest in owning property by newly minted millionaires so high, it is not likely that supply will meet demand in the near future in the luxury sector. The nation needs an estimated 5.8 million additional homes to meet demand, according to Realtor.com.²

Even if demand eventually plateaus next year, property prices are not likely to drop significantly.

CINDY RANEY & TEAM | THE TREND REPORT 2022 33
See page 51 for a full list of resources. To Diversify My Portfolio As a Long Term Investment For Financial Gain From Rental Income As an Inheritance For My Children 46.7% 46.1% 45.9% 45.3% Top Reasons Why the Affluent Purchase Real Estate as an Investment
Sold for $4,600,000
23 COVLEE DRIVE
(Represented Buyers)

Properties Owned For Longer Periods

Given the shortage of homes for sale, sky-high home values, and older homeowners’ growing desires to age in place, the average tenure of home ownership has been increasing over the last few years. This will likely continue – especially if buyers made purchases in the last two years and are locked into low interest rates. It is unlikely that they would trade these homes for higher priced ones unless there was a major life impact.

“The replacement value is something that people are thinking about now,” said Cindy Raney. “If they had to replace today what

they had bought two years ago, they would have to pay twice as much or they would get less. People are not going to move unless they are dead-set on switching locations or they’ve had a significant life event. One of the main reasons why inventory levels aren’t rising much is that sellers frequently don’t have a parallel move.”

As for those who are planning to purchase over the next few years, they are not making short-term decisions either – which could also lead to longer periods of home ownership tenure. For the wealthy who don’t need to sell, they may see opportunity in the market for building up their real estate portfolios.

Some real estate insiders expect that a fair number of these homes will eventually become inheritance or legacy properties, providing families with a lifestyle continuum should they ever need to shelter in place again.

34 CINDY RANEY & TEAM | THE TREND REPORT 2022
23 BAYBERRY LANE Sold for $2,845,000 by Cindy Raney & Team

Climate Migrations

Another emerging priority for many buyers – especially among younger demographics such as Millennials and Gen-Z – will be finding property in a location that is less affected by climate change and extreme weather.

For example, a 2021 survey conducted by Forbes Home3 found that almost a third of respondents cited worsening weather conditions as a reason to move. Another third of participants also cited “better weather” for their upcoming move or move within the last two years.

In the future, it is expected that increasing numbers of buyers will seek out homes in locations that are less prone to natural disasters, such as hurricanes, wildfires, tornadoes, hail or wind events, or severe winter storms. Out-of-state moves will be particularly driven by buyers willing to trade worries about property damage and rising costs of insurance for places that are perceived to be less exposed to these kinds of disasters. In recognition of these growing environmental challenges, compounded by the increasing pressure of climate change, Fairfield County has set itself an ambitious goal: to be carbon-free by 2040, with additional steps to see lower harmful emissions and air pollution by 2030.

As a 2020 New York Times article4 proclaimed, “the great climate migration is already here,” and another Times article5 noted, “climate migration will reshape America.” Climate-related moves are only expected to grow, according to anecdotal reports and a growing volume of academic research.6

PUTTIN G IT IN PE R SPECTIVE

Known to be cautious and circumspect, the affluent investor will likely be looking for a hedge against an economic downturn while fortifying their financial status in the immediate future. Their search for stability over the remainder of 2022, and possibly into 2023, will likely guarantee them a very comfortable lifestyle even in chaotic times.

Their shift from YOLO attitudes to a more conservative approach opens a unique window of opportunity for modern real estate agents. As clients are drawn to properties or places that bring them long-term financial or physical security, they will also be looking for not just places, but people they can trust. According to the survey, over four in five respondents who have used a real estate agent to assist in purchasing a home in the past will use a real estate agent for their next home. Clearly, trust in real estate agents remains strong. Since the majority of the affluent place a lot of value on their advisors, it is imperative that agents listen to their clients and truly hear their needs in this new era of stability-seeking.

CINDY RANEY & TEAM | THE TREND REPORT 2022 35
See page 51 for a full list of resources.
Respondents who Cited Climate Change as a Reason to Move in 2022 30% Ages 18-25 35% Ages 26-41 9% Ages 58-76 25% Ages 42-57 32% Ages 77+ Source: Forbes Home
Coldwell Banker Real Estate LLC
36 CINDY RANEY & TEAM | THE TREND REPORT 2022

Luxury property buying across the globe is heating up. American affluent buyers are seeing opportunity abroad like never before. International buyers have also come back to the U.S. For many, it’s not just a lifestyle play –but a long-term diversification play.

CINDY RANEY & TEAM | THE TREND REPORT 2022 37
borders MOVING BEYOND

Restrictions and general caution tied to international travel during the pandemic caused affluent investors to look for luxury home purchases closer to home as opposed to abroad over the last two years.

In the United States, especially, “domestic home buying demand was exceptional and, therefore, boosted home sales nationally,” NAR Chief Economist Lawrence Yun once commented.

Now it appears that the affluent are returning to global property buying with renewed vigor.

All Cooped Up International Travel Opens Up

While it was possible to purchase a home outside of your home country during COVID-19 thanks to virtual tours, border closings and travel restrictions made it difficult for prospective buyers to visit different countries and shop for homes. This, in turn, dampened international homebuying both in the U.S. and internationally. But that’s beginning to change.

According to the latest UNWTO World Tourism Barometer,¹ international tourism saw a strong rebound in the first five months of 2022. This means that the sector has recovered almost half (46%) of pre-pandemic 2019 levels.

As travel has opened up so has international property buying. Pent-up demand – coupled with a search for investments, asset diversification, lifestyle reasons, economic factors, and even political uncertainty at home – will continue to drive the affluent to look at other parts of the world for their property needs.

While developed countries such as the United States² and those within the European Union are thought to offer the most investment security, affluent buyers are also looking at emerging markets or “frontier”³ markets – i.e. those that are transitioning to become more integrated with the global economy. Some of these emerging markets include Mexico, Costa Rica, Panama, Indonesia, Chile, and Dominican Republic.

38 CINDY RANEY & TEAM | THE TREND REPORT 2022
See page 51 for a full list of resources.
272 FAIRFIELD BEACH ROAD Sold for $2,855,000 by Cindy Raney & Team

Increasingly, American affluent consumers are looking beyond U.S. borders. According to the latest Wealth-X figures, the number of American high-net-worth individuals who purchased an overseas property in 2022 is projected to rise by 14% from 2021 and 29% from 2019. While the strength of the U.S. dollar against other currencies may be driving most of this demand, the wealthy also cite other reasons for looking abroad, including the rising cost of living in the U.S., surging home prices, and political climate at home.

The propensity for international property ownership is already high among affluent Americans. According to the survey, 67% of respondents already own investment properties outside of the U.S. Currently the age group with the largest share of ownership of foreign property is 55+.

The survey also reveals that nearly 92% of respondents are now considering purchasing a property abroad, with Central America as their top preference (23%). Not surprisingly, Canada and Mexico came next (given their geographical proximity to the U.S.), followed by Asia, South America, and Europe. The 55+ age group still have the most propensity to purchase abroad, but it is the younger demographic (ages 25 to 34) who show the greatest change in their aspirations, moving up the ranking from last to second position.

CINDY RANEY & TEAM | THE TREND REPORT 2022 39
Look Abroad Rising Cost of Living A Strong Dollar Surging Home Prices Political Climate 26.5% 20.8% 25.6% 26.5% Reasons For Purchasing an International Property Note: Based on data between January 2019 and estimated to December 2022. Source: Wealth-X, an Altrata company 2022; Barton Consulting E* - Estimated count. Overseas Properties Owned by U.S. Citizens 2019 2020 2021 2022E* 47,300 53,500 61,000 29,800 Central America North America: Canada & Mexico Asia South America Europe Australia & New Zealand None of these Caribbean 23.0% 20.5% 20.4% 18.1% 14.1% 10.8% 10.4% 9.4% U.S. Buyers' Destination Preferences
Americans

The population of individuals worldwide with a net worth over $5 million is expected TO GROW BY 8% in 2022.

The incredible disappearing international buyer returned to the U.S. this year, according to the National Association of REALTORS® (NAR).4 This signals a notable shift after three years of lagging foreign investment in U.S. residential real estate.

Eager to put their money in U.S. real estate, which has traditionally been regarded as a safe haven, international buyers purchased 98,600 residential properties last year, totaling $59 billion. This was an 8.5% increase from the previous 12-month period.

Even with real estate prices as high as they are in the U.S., many international buyers from high-cost cities view a U.S. property as a relative deal. According to NAR, a typical property costs $28,570 per square meter in Hong Kong, $26,262 in London, and $10,947 in Toronto. Meanwhile, it is $8,250 per square meter in San Francisco and just $3,170 in Miami. Even New York is cheaper than Hong Kong and London at $17,191.

Top Countries

Traditionally, Chinese buyers have spent the most on U.S. real estate – and that did not change in 2022. China and Canada remained first and second in U.S. residential sales dollar volume at $6.1 billion and $5.5 billion, respectively, continuing a trend going back to 2013.

However, buyers from Canada and Mexico made up the highest percentage of overall international buyers in the U.S. marketplace. Chinese participation in U.S. real estate reached its peak in 2014 and 2015, but dropped starting in 2019 as the Chinese government cracked down on capital flight and overseas real estate transactions. In 2021 and 2022, presumably due to COVID-19 travel restrictions, the percentage of Chinese buyers investing in U.S. real estate sunk to half of what it was in 2020.

40 CINDY RANEY & TEAM | THE TREND REPORT 2022
International Buyers Return to U.S.
Source: Wealth-X
Source: National Association of REALTORS® (NAR) Top International Buyers by Dollar Volume Top International Buyers by Percentage Share China Canada India Mexico Brazil Colombia $6.1B $5.5B $3.6B $2.9B $1.6B $1.0B China 6% Canada 11% Colombia 3% Brazil 3% Mexico 8% India 5% See page 51 for a full list of resources.

Chinese Investment Has Room to Grow

Still, this suggests that Chinese demand for U.S. real estate has considerable room to grow this year and in the years ahead. Chinese investors could be searching for an escape hatch from the country’s COVID-19 lockdowns and real estate crisis.5 The property sector, which accounts for about a quarter of China's economy, has struggled since the summer of 2020.

Types of Properties

Investment properties and vacation residences are among the most popular reasons for purchasing a home for international buyers, according to NAR data. Like the survey respondents, many international buyers plan to use their U.S. property for vacation or rental purposes. This, once again, highlights the wealthy’s propensity for multiple homeownership, investment, and lifestyle enjoyment.

This contrasts with Chinese buyers who appear to be mainly focused on purchasing primary residences.

All-Cash Offers Set to Increase

All-cash offers are expected to rise with the number of international buyers returning to the market.

Given the hurdles involved with getting a loan from a U.S. banking institution, international buyers are generally more likely to pay cash than U.S. nationals. In 2022, the share of all-cash offers increased amid tight competition for limited homes on the market. All-cash sales accounted for 44% of international buyer transactions, nearly twice the rate (24%) of all existing-home buyers, according to NAR. Nearly 7 out of 10 Canadian buyers (69%) made all-cash purchases.

Luxury real estate has always been a global pursuit. The pandemic momentarily halted this by limiting global movement and slowing international property buying. Now the tides are changing yet again.

The geopolitical events of recent years may cause the normally risk-adverse affluent to look beyond their home country’s borders for sunnier shores and a safeguard. Shifting mindsets toward stability, physical safety, family, wellness, personal enjoyment, and a pent-up desire for experiences could also put the wealthy on the move globally again. With the rapid embrace of technology increasing connectivity worldwide and more wealth at their disposal today, the affluent consumers' freedom to move about the world may be exercised to an even greater extent over the next few years than at any other time before.

CINDY RANEY & TEAM | THE TREND REPORT 2022 41
PUTTIN G IT IN PE
R SPECTIVE
ASHLEY DEMBOWSKI, SVP Growth & Affiliate Services
All-Cash Purchases Among Top International Buyers Canada Colombia China Mexico Brazil India Source: National Association of REALTORS® (NAR) 69% 65% 58% 27% 26% 9% See page 51 for a full list of resources.
Coldwell Banker Real Estate LLC
42 CINDY RANEY & TEAM | THE TREND REPORT 2022
1121 SASCO HILL ROAD Sold for $4,750,000 by Cindy Raney & Team

CREATIVE

Rising interest rates are inspiring a new generation of high-net-worth buyers to get creative with their real estate financing this year and take a page out of the ultra-highnet-worth investor playbook.

CINDY RANEY & TEAM | THE TREND REPORT 2022 43
financing

A surging stock market, home equity gains, rising incomes, historically low borrowing costs, and a desire for larger living spaces sparked a home buying and boom over the last two years.

With borrowing costs at historic lows, large U.S. banks ended up doubling down on wealthier customers who sought loans to buy primary or secondary homes during this period. The combined value of loans made by the wealth management arms of JPMorgan Chase, Bank of America, Citigroup, and Morgan Stanley surpassed $600 billion in the second quarter of 2021, up 17.5% from 2020, per the Financial Times.¹ This represented 22.5% of the banks’ total loan books, up from 16.3% in mid-2017.

This type of borrowing was on the rise for more than a decade. However, the pace picked up after the Federal Reserve cut interest rates in response to the pandemic.

Borrowing Boom Real Estate as a Hedge

Starting in March 2022, the Federal Reserve embarked on what’s been called “the sharpest round of rate hikes since the 1980s” to combat inflation.² The average 30-year fixed mortgage rate is more than double what it was last year, and could rise even further.

The expectation is that a new generation of millionaires – flush with the wealth gains they earned over the last two years – could turn to real estate as a hedge against inflation.

Wealth of U.S. individuals with a net worth over $5 million is expected to RISE BY 35.4% between 2019 and 2022.

44 CINDY RANEY & TEAM | THE TREND REPORT 2022 See page 51 for a full list of resources.
“I think buyers don’t mind taking some money out of the stock market right now and putting it into something more tangible like luxury real estate,” said Jason H. Mudd.
Source: Wealth-X 349 BEACH ROAD Sold for $2,495,000 by Cindy Raney & Team

Affluent buyers’ push to diversify their real estate assets will also likely come with a desire to lessen their exposure to higher interest rates in the short-term. As a result, cash transactions are expected to increase this year. Other creative financing options – like margin or stock portfolio loans and private bank loans – which are more commonly accessed by ultra high-net-worth investors – will gain more mainstream appeal among the mass affluent population, which grew in size during the pandemic. Additionally, adjustable rate mortgages and seller carry second mortgages could also see an uptick.

All-Cash Transactions

During the pandemic, cash transactions increased. The National Association of REALTORS® reported that the share of all-cash sales to existing-home sales surged to 25% in April 2021 – a notable increase from the 15% share in 2020 and 20% share in 2019. Cash sales also rose with more vacation

sales and with a higher fraction of vacation homebuyers paying all-cash. By August 2022, all-cash sales accounted for 24% of transactions for the month, the same share as in July, but up slightly from 22% in August 2021.

The responses from the proprietary survey also support these findings. According to the majority of high-net-worth respondents, they are more inclined today to use cash vs. a traditional mortgage to finance a future property purchase.

Luxury Property Specialists across the country are reporting similar findings. “Almost all of our high-end buyers are purchasing with cash,” said Mudd. “Buyers may be getting financing, but in the luxury market, offers contingent upon financing are still not enticing sellers. This is similar to last year. However, when interest rates were very low, buyers frequently borrowed against their investment portfolios and financed the property privately.”

The term “cash” can be misleading. Often times, an all-cash offer to a seller eventually turns into a loan prior to closing. Or, cash is really a loan from a private bank or investment firm, if a buyer is borrowing against their stock portfolio.

CINDY RANEY & TEAM | THE TREND REPORT 2022 45
Diversifies Cash Private Wealth Mortgages Traditional Mortgage 50.6% 48.1% 45.8% 25-34 35-44 45-54 55+ Propensity to Use Cash for Their Next Home Purchase by Age Group Future Property Purchases
Financing

Still, many high-net-worth buyers prefer to use cash to buy homes, particularly Millennials or Gen Yers, if they have received a gift or inheritance and tend to not have the deep portfolio of investment assets that their older counterparts would have. They would also not want to pay the currently higher mortgage rates because the interest return on their cash is less than the cost of the mortgage interest rate.

Leveraging Portfolios

Ultra-high-net-worth investors have always had access to greater wealth building tools and tappable lines of credit with lower interest rates since their wealth makes them a lower risk to lenders. The difference now is that these practices are trickling down to the mass affluent population. Assetbacked lending – i.e. borrowing against portfolios – became increasingly popular during the pandemic when interest rates were low and the stock market was at a record high.

Typically, affluent buyers pledge stock as collateral and get what is considered a “margin loan” at a low interest rate and flexible repayment terms. This allows them to tap the cash they need without having to sell investments whose value could have kept rising. These loans also allow them to avoid capital gains tax if they were to sell the investment.

Even as interest rates have risen and the stock market has cooled, the benefit of these types of loans may still outweigh the disadvantages for some investors. “You can simply pay yourself back within the account and there is no monthly payment that you need to make,” said Shant Banosian, Executive Vice President of Sales for Guaranteed Rate. “The other advantage is that you can access the money quickly. You can act and feel like a cash buyer to a seller.” Additionally, investors don’t want to take a loss on a sale if their stock is down. “People are banking on the fact that the market is going to recover as inflation gets under control in the next 12 to 15 months,” he added.

In 2020, the share of originations by nonbank lenders leapt to NEARLY 70%.

Source: McKinsey.com

NonTraditional Bank Loans

Financing options have changed considerably over the last year with private banks and wealth management companies now offering more exclusive financing options, such as zero deposit mortgages, multiple loans, and interest-only mortgages, to target the aspirations of the mass affluent. According to McKinsey.com:

46 CINDY RANEY & TEAM | THE TREND REPORT 2022

“Five years ago, nonbank lenders accounted for roughly half of total originations; two years ago, that figure was nearly 60%. In 2020, the share of originations by nonbank lenders leapt to nearly 70%.”

Adjustable-rate mortgages, known as ARMs, have also seen an uptick in popularity recently as homebuyers try to secure a lower interest rate. “One of out of every five mortgages is an adjustable-rate mortgage, and on the luxury side, it’s much higher,” said Banosian. These loans are typically fixed for five, seven, or 10 years and then they adjust to wherever rates are in the market. He continued: “As rates have gone up, you’re taking into consideration how long you plan on owning the home so you can align it with your financial goals. My experience is that very few clients get to the other side of these loans. They can usually refinance the loan before the rate adjusts higher. Or they will sell the house within that fixed period.”

PUTTIN G IT IN PE R SPECTIVE

Between the historic rise in interest rates this year and the growing population of high-net-worth buyers, the number of real estate transactions using tactics such as asset leveraging and other creative financing methods is only expected to increase.

While the idea of using debt as a strategy is not new for the world’s wealthiest individuals, more and more wealth managers are advising their clients to embrace this tactic. The more they can borrow, the longer they can hold appreciating assets. And the longer they hold, the bigger their tax savings. This strategy could help them in the short term, since it helps bridge the gap between rising interest rates and prices as the market slowly moves into a more balanced state for buyers and sellers. It could also help them in the long run, when it comes to building up their wealth over a lifetime.

CINDY RANEY & TEAM | THE TREND REPORT 2022 47
1121 SASCO HILL ROAD Sold for $4,750,000 by Cindy Raney & Team
48 CINDY RANEY & TEAM | THE TREND REPORT 2022
Sold for $6,200,000
1111 SASCO HILL ROAD
by Cindy Raney & Team

PERSPECTIVE FOR THE FUTURE

Emerging from the pandemic and a historic homebuying boom, we have arrived at a key inflection point. The data makes it clear that many luxury real estate markets are transitioning. As inventory levels rise across locations, property type, and price points, the expectation is that luxury property markets will eventually shift toward balance or a traditional buyer's market.

However, not all indicators point toward a major downturn. If new inventory entering the market continues to remain tight, the seller's market trend that has dominated the luxury real estate world will likely continue for some time. This in turn will stall the decline of home prices.

This, in particular, is true for Fairfield County, where currently sellers are still in the driver’s seat. Like many luxury markets, Fairfield County should expect to see the level of sales gradually decline but more as a reflection of the lack of new inventory entering the market rather than fewer buyers. Demand versus supply is not equal in Fairfield County and is further intensified by a high percentage of migrating out-of-state affluent buyers needing to purchase a home.

While the Fairfield County market may still be favorable to sellers, days of zaniness which saw 10 offers at 30% over asking are no longer. But due to the lack of new inventory and supply versus demand, homes priced and prepped properly are still selling close or just above asking, often with more than one offer.

The vast amount of wealth that was created during 2020 and 2021, coupled with the affluent’s steadfast reliance on real estate for wealth building, also makes it hard to imagine a fullscale retreat from property buying, despite some of the current economic challenges.

Despite affluent individuals losing some of this wealth to stock market declines this year, Wealth-X still forecasts a modest uptick in wealth allocation to real estate and luxury assets, predicting it will grow $1,050.8 billion globally and $438.1 billion in the U.S. by the end of 2022.

Wealthy individuals consistently embrace real estate – four in five

survey respondents agree that real estate is a safe investment and almost nine in 10 think that the 2023 real estate market will be better or the same as 2022. Even if some affluent clients choose to wait on the sidelines, they may not be doing so for long. Over 75% are planning a home purchase within the next one to six years, with more than 40% planning to move in the next one to three years.

While demand for luxury properties is widely expected to soften compared to last year, it is important to put the slowing of sales and increases of inventory in perspective: 2021 was a rare market occurrence brought on by a mass wealth creation event and a life-changing pandemic.

Instead, 2022 market comparisons are better understood in the context of stable years. Sales in the first ten months of 2022 are still 8.6% higher compared to this same time period in 2019. Looking back even further, today’s luxury single-family home prices have seen 60% appreciation since 2017 while luxury attached home prices increased nearly 41%. We know that a home does not just provide financial stability; as we discovered during the pandemic, a home can provide emotional and psychological security, a sense of wellness, and a better quality of life. It is this pursuit of the dream home – whether it is for investment or vacation purposes, or in the United States or abroad – that will always drive the affluent toward real estate as it fulfills both the intangible and tangible needs in their lives.

As the luxury housing market begins to reset and wealthy individuals pursue properties that provide them with a source of stability over the next few years, they will also be looking for stability in their trusted luxury real estate professionals.

Cindy Raney & Team’s commitment to their clients and the quality of service levels provided is unwavering. They have the knowledge and expertise – not just in their local real estate climate, but also on financial markets, lifestyle, and global events – so they can properly advise their clients with a balanced perspective and help guide them through this present moment of uncertainty –by always having their eye on the future.

CINDY RANEY & TEAM | THE TREND REPORT 2022 49

Methodology

The Coldwell Banker Global Luxury® program collaborated with Censuswide, the Institute for Luxury Home Marketing, and Wealth-X to provide insights into wealth creation, real estate, property investment, luxury spending preferences, and emerging trends.

Censuswide Research conducted by Censuswide between August 2, 2022 and August 15, 2022. The survey reached 2,001 U.S. consumers aged 18+ with a household income of $1M+ and who have bought a home in the U.S. worth $1M+, with quotas of a minimum of 100 per the regions targeted. Censuswide abides by and employs members of the Market Research Society which is based on ESOMAR guidelines and principles.

Institute for Luxury Home Marketing

For The Trend Report 2022, the Institute for Luxury Home Marketing analyzed the data for the top 10% of 120 U.S. markets. Data contained is from January 1, 2019 to August 31, 2022 and has been computed by the Institute for Luxury Home Marketing’s data research partner and shared with Coldwell Banker Global Luxury® and based on information attained both privately and publicly. The Top 10% is defined as homes (or in terms of inventory or list prices), matching or exceeding the 90th percentile sold price for homes sold from January 1, 2019 to August 31, 2022. Closed sales reported later than this analysis period were not included. Property-specific sales records were standardized, inaccurate sale prices were corrected when necessary and all duplicate records were manually excluded. As a result, statistics available via the source data providers may not correlate to this analysis.

Data is then represented both monthly and yearly throughout the report, using medians, averages, totals, percentages, and ratios. However, unless otherwise specified, statistics

typically presented in this report represent both the monthly median and the median of monthly medians of the respective data. Market Status is an analysis of Sales Ratio and represents market speed and market type: where the sales ratio is 15% or less, it is a buyer's market. If it is greater than 15% and less than 21% it is a balanced market. Over 21% it is a seller's market. If greater than 100%, MLS data reported previous month’s sales exceeded remaining inventory pulled at the end of the month.

Wealth-X

This report presents data on the wealthy from Wealth-X’s latest comprehensive update to their proprietary Wealth and Investable Assets Model, which gauges the size and combined wealth of the population with personal wealth of $1M+. The model produces statistically significant estimates for total private wealth and estimates the size of the population by level of wealth and investable assets for the world, and for each of the top 70 economies and 200 cities. Wealth-X’s model is unique in the sense that the Wealth-X Database enables them to construct wealth distribution patterns using real, rather than assumed wealth distributions, making the model much more reliable.

Wealth-X updates the model’s macroeconomic inputs on a regular basis and recently completed a comprehensive once-in-five-years update of the model. This entailed updating historic macroeconomic and country-specific indicators, and wealth distribution curves. This was undertaken, firstly, to ensure that we have gauged correctly the relationships between the indicators that the model is using; and secondly (although no less importantly) in light of the fact that the Wealth-X Database has grown significantly over the past five years. This update allows Wealth-X to include even more accurate wealth distribution curves, enhancing the model’s statistical precision and reliability.

50 CINDY RANEY & TEAM | THE TREND REPORT 2022
23 BAYBERRY LANE Sold for $2,845,000 by Cindy Raney & Team

Resources

PAGES 15-21 | Market in Perspective

1. https://fortune.com/2022/09/21/fedseptemberinterestratehikefirsttimehomebuyers/

2. https://www.usbank.com/investing/financialperspectives/marketnews/isamarketcorrectioncoming.html

PAGES 23-29 | Trend 1: An Unconventional Buyer's Market

1. https://www.cbsnews.com/news/mortgageratefreddiemachomeprices/

2. https://www.statista.com/statistics/275159/freddiemachousepriceindexfrom2009/

3. https://www.statista.com/statistics/275159/freddiemachousepriceindexfrom2009/

4. https://www.realtor.com/research/august2022data/

PAGES 31-35 | Trend 2: Searching for Stability

1. https://www.realtor.com/research/august2022data/

2. https://www.realtor.com/research/ushousingsupplygapexpands/

3. https://www.forbes.com/homeimprovement/features/americansmovingclimatechange/

4. https://www.nytimes.com/interactive/2020/07/23/magazine/climatemigration.html

5. https://www.nytimes.com/interactive/2020/09/15/magazine/climatecrisismigrationamerica.html

6. https://www.wired.com/story/asclimatefearsmountsomearerelocatingwithintheus/

PAGES 37-41 | Trend 3: Moving Beyond Borders

1. https://www.investopedia.com/median-income-by-state-5070640

2. https://www.investopedia.com/medianincomebystate5070640

3. https://www.investopedia.com/terms/e/emergingmarketeconomy.asp

4. https://www.globaltimes.cn/page/202205/1265327.shtml

5. https://www.reuters.com/world/china/chinas2022propertysectoroutlookworsenshomepricesseen falling20220905/

6. https://www.cnbc.com/2022/09/02/morganstanleychinesestockscouldplungeifrealestategetsworse

PAGES 43-47 | Trend 4: Creative Financing

1. https://www.ft.com/content/8a328af4b8f248c582a9d7dc1c345e1c

2. https://www.reuters.com/markets/europe/fedofficialsseeusinterestratesrisingfurther20220830/

DISCLAIMERS

©2022 Coldwell Banker. All Rights Reserved. Coldwell Banker and the Coldwell Banker logos are trademarks of Coldwell Banker Real Estate LLC. The Coldwell Banker® System is comprised of company owned offices which are owned by a subsidiary of Anywhere Advisors LLC and franchised offices which are independently owned and operated. The Coldwell Banker System fully supports the principles of the Fair Housing Act and the Equal Opportunity Act.

This report was compiled using the data platforms of Censuswide, the Institute for Luxury Home Marketing, and Wealth-X. Data is deemed reliable but not guaranteed for accuracy. The information contained herein has been compiled together for informational purposes. The Coldwell Banker® brand is not making any recommendations for action based on the data within this report. Readers are encouraged to engage with their appropriate legal, accounting and professional counsel before implementing any suggested actions. The Coldwell Banker® brand and Censuswide, the Institute for Luxury Home Marketing, and Wealth-X have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof and shall not be held liable for any claims or losses that may rise from the implementation of the data in this report. The data is subject to change at any time.

CINDY RANEY & TEAM | THE TREND REPORT 2022 51

Cindy Raney & Team’s Notable Sales

ADDRESS TOWN CLOSE PRICE

1111 Sasco Hill Road 1121 Sasco Hill Road 4 Ferry Lane East 23 Covelee Drive 96 Laurel Brook Lane 18 Cranbury Road 272 Fairfield Beach Road 23 Bayberry Lane 27 Maple Avenue North 4 Sharp Turn Lane 349 Beach Road 62 Meadow Ridge Road 67 Old Hill Road 165 Hubbell Lane 20 Raymond Lane 3 Keene Road 13 Sprucewood Lane 8 Hockanum Road 1081 Hillside Road

Fairfield Fairfield Westport Westport Fairfield Westport Fairfield Westport Westport Westport Fairfield Southport Westport Fairfield Wilton Westport Westport Westport Fairfield

$6,200,000.00 $4,750,000.00 $4,701,840.00 $4,600,000.00 $3,700,000.00 $3,500,000.00 $2,855,000.00 $2,845,000.00 $2,710,000.00 $2,675,000.00 $2,450,000.00 $2,350,000.00 $2,300,000.00 $2,250,000.00 $2,250,000.00 $2,199,000.00 $2,100,000.00 $2,100,000.00 $2,000,000.00

52 CINDY RANEY & TEAM | THE TREND REPORT 2022

MASTERS of our C RA F T

Luxury is the difference between the expected and the exquisite. Between a song and a symphony. A work in progress and a work of art. Cindy Raney & Team’s Luxury Property Specialists are masters of this craft.

W WW. C INDYR A N E Y . c o m Consult with a Luxury Property Specialist today. Cindy Raney & Team 355 Riverside Ave, Westport, CT 06880 | 203.625.1025
CINDY RANEY & TEAM | THE TREND REPORT 2022 54 www.cindyraney.com | @cindyraneyandteam

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