Maryland Luxury Home Market Report for January 2023

construction industry trends and luxury home market report

Maryland Luxury Home Market Report for January 2023

Mueller Homes constantly reviews local and national trends to understand the data on real estate markets, supply and demand issues, and construction industry details.  One of our go-to resources is the report published by The Institute for Luxury Home Marketing. In this month’s report, a recap is provided on the luxury real estate market of 2022 along with a forecast of what’s to come.

Luxury Real Estate Market

Resilient – that is the best way to describe the luxury real estate market in 2022.  Although the national real estate market saw a decline, luxury homes remained “resistant to any dramatic or negative change and still retains its safe investment appeal to the affluent.”  There were many factors that affected consumer buying decisions in 2022, not the least of which was rising interest rates, inflation, and the unrest in the global political environment including Ukraine.  For many affluent individuals in higher net worth brackets, these factors are considerations, but not deciding factors.  After all, we all knew that the real estate boom was going to have to slow down at some point.  So, houses are staying on the market a little longer, especially in price points under $1M but many homes are still being sold in 60-90 days, so it’s all about perspective.

The Real Story About Interest Rates

mortgage rates over the last 30 years

The cost of money has been unbelievably low over the past several years.  This too, could not be sustained forever but, when considered in context (see chart at right), rates are still historically low.  While the headline news is all about rising interest rates, the reality is that rates are still at historical lows, when considered in context over the past 20-30 years.  One of our go-to lenders, David Ratti at Envoy Mortgage, provides a good recap on the current status of the jumbo loan market.  David says, “There is a much better appetite for jumbo loans today, with very competitive rates (for example, as of 2/9/23, rates are in the fives, with no points).  You still need to have 20% down to get a decent rate, but there are more loan programs available today then there were just a year ago.  It’s also important to work with a lender that has experience with jumbo loans and several loan program resources.  Remember that a construction loan is temporary, but you can often get much better rates and terms at the end of the construction period with a takeout jumbo loan.  This was not necessarily the case in 2022, but we are definitely seeing a change in 2023.”

Back to Normal

The expectations and forecast for the luxury real estate market may be, overall, a bit softer than the robust 2020-2022 period, but is expected to return to a more normalized market for the immediate future.  Investing in real estate is still a long-term proposition for most individuals.  As the report states, ” Expect properties to stay on the market longer, prices not to drop significantly, and the affluent to make decisions based on long-term investment. The art of selling and buying in this market needs a critical and analytical approach; understanding the realities and setting expectations accordingly will ensure that goals are achieved.”

It’s All About the Lifestyle

In discussions with our clients, we have heard time and again that building a custom home “is all about the lifestyle.”  A large portion of the homes we build are located on waterfront properties and there is nothing that can compare with the day to day enjoyment that comes with a forever home on the water.  The shift in the real estate market may also open up windows of opportunity for those who are interested in purchasing a lot or land.  In the infamous words of former Maryland Comptroller Louis Goldstein, “Guess what? They’re not making anymore land,” so, it’s always a good idea to make a lot or land purchase for a forever home concept, since the pricing isn’t going to go down.  Our checklist for lots and land, along with a knowledgeable Realtor, can be invaluable resources for the lot purchase process.

If you’re considering building a luxury home, download the free book to help you ensure that the process is truly memorable or contact us to set up a design consultation and begin the journey.

Share Article