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. This has opened up the market in this category, causing some affluent buyers to reconsider whether they actually need a larger property.

Inventory levels for properties under 3,500 square feet have RISEN BY 129% since April 2022.

Now that the pandemic has loosened its grip on lifestyle decisions, the big house may not be as much of a necessity as it was during 2020 and 2021. Some affluent buyers may not need or want to work from home anymore. Schools are open again, and kids don’t need extra spaces for at-home learning and play. Others may be looking to return to city life, where smaller footprints prevail.

Record high prices, coupled with rising interest rates, have also caused some buyers to adjust their house budgets.

“If they are cash buyers, they may lower the price point they are looking in if the property prices are not to their liking or if their cash was impacted by the recent stock market fluctuations,” said Jill Hertzberg of The Jills Zeder Group, a Luxury Property Specialist affiliated with Coldwell Banker Realty in Miami Beach.

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.