Volatility in today's real estate market is driving more and more inequity between middle and upper class home owners in America.
While interest rates are still quite low from an historical perspective, interest rates have climbed relative to the generational low over the last few years. The buyers with cash and assets are motivated to buy to protect their cash from inflation AND or to leverage their cash and assets for lower interest rates, an advantage most buyers don't have. Concurrently, this is decreasing the overall number of homeowners in the middle class, further exacerbating the wealth gap.
To compound that, given the popular presumption of a forthcoming market setback, 2023 has become a particularly attractive time for high net worth investors to buy even more real estate.
Not only for the prospect of selling these homes when the market corrects, but also for protecting their cash from inflation as well as for earning higher rental income in the meantime, largely from middle and upper middle class renters who can no longer afford the mortgages they originally planned and saved for.
For all these reasons, 2023 is fostering sustained and even higher activity amongst high net worth real estate buyers while the middle market is largely deteriorating. This trend is causing major concern among policymakers, who worry about the long-term implications of a shrinking middle class on the overall health of the economy.
On the heels of that, the well-founded argument can be advanced, therefore, that not only are the upper echelons of the real estate market more resilient to recessionary trends, but also for the real-estate agents who need to make a sustainable living off real estate sales, the highest frequency and turnover market will now overwhelmingly be the luxury market.
This is leading to a growing divide between real estate agents who specialize in luxury properties and those who work in the middle market, with the latter group struggling to adapt and survive with the times.
Grasping this new reality, Jere Metcalf, a real estate thought leader turned performance coach and podcast host, points to the luxury market as the safest refuge for realtors today.
Through her coaching platform Breakthrough Luxury, Jere is helping top luxury agents tap into their next level of success and, due to the trends of the market today, she is now attracting and helping the traditional mid-market agents adapt to the times and position themselves for market resilience and sustained success by transitioning them into luxury real estate agents. While this may be initially counter-intuitive and outside the comfort zones of many agents, Jere shows how the luxury market is really the only sustainable marketplace during these hard times.
On her podcast, Jere reinforces her stance through telling, anecdotal examples. For instance, on episode 287, Jere interviews ultra successful neophyte agent Marko Gojanovic of the MR Luxury Group with ONE Sotheby's International Realty.
Marko and his partner, Reid Heidenry, demonstrate how they leveled up their business during the pandemic and closed over a quarter of a billion dollars in luxury homes in 2022 alone
Both coming from an entertainment and nightlife background, Marko and Reid's rapid rise to success in the luxury industry is inspiring and demonstrates the level of opportunity currently available in the market sector. An extensive background or pedigree in luxury real estate is not required. Net net, not only did the transition to luxury real estate help Marko and Reid survive during the market shift, it helped them grow a phenomenally lucrative business.
Jere emphasizes that the luxury real estate market is more resilient to recessionary trends than the middle market. Furthermore, for real estate agents who need to make a sustainable living off sales, the highest frequency and turnover market will overwhelmingly be the luxury market. With Jere's guidance, mid-market agents can learn the unique skills and approaches necessary to succeed in the luxury market.
For more information on prevailing market trends and how realtors can adapt to be ahead of the 8 ball, tune into the next show of Top Real Estate Agents Tell How They Do It.
