Coldwell Banker research suggests that the most successful luxury properties are those that offer a sanctuary in the city, with outdoor spaces, wellness amenities and privacy. The Residences at 566 was 90 percent sold pre-construction. Image courtesy of Ricardo Rodriguez & Assoc.

Luxury properties offer a barometer for the overall housing market. Up until October 2023, the luxury real estate marketplace appeared to be in a holding pattern. But something started to shift in the fourth quarter: much-needed inventory of single-family luxury homes increased and sales improved. This optimistic mood is reflected in Coldwell Banker Global Luxury’s annual Trend Report 2024, in which wealthy Americans expressed a positive outlook of the high-end market as we begin 2024.

Sales of luxury properties in the U.S. dropped month-over-month in 2023 through September compared to the same months in 2022. Buyers and sellers stepped cautiously away as mortgage rates continued to rise. Would prices fall, buyers wondered? Would the selection of available houses improve?

As the luxury market entered the fourth quarter of 2023, there was a greatly needed influx of inventory: 14.2 percent more single-family homes and 7.2 percent more attached properties compared to the fourth quarter of 2022. This translated to a 4.2 percent uptick in single-family home sales and a 14.2 percent increase in attached property sales compared to the previous year.

Thirty-year mortgage rates hit their peak in October then began to decline, a trend that should encourage more listings and normalize pricing if today’s high rates are tempered by the Federal Reserve. While affluent buyers are sometimes thought to be immune to rate hikes because they pay in cash, they are impacted by the Fed’s decisions due to stock investments and ties to financial markets.

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Market optimism is reflected in the Trend Report, which surveyed 1,053 U.S. adults with a household income of $1 million or more, as well as consumers who had recently purchased a home in the U.S. worth $1 million-plus or planned to do so in the near future. These consumers tend to view the real estate market more positively than the rest of the U.S., with 36.3 percent of survey respondents stating they believe the market will be better in 2024.

The majority of luxury buyers in the Northeast expressed an interest in purchasing a home in the next year. According to the data, 13.14 percent stated they wish to do so in the next three months, 18.25 percent plan to buy in four to six months, and the greatest number, 20.44 percent, plan to purchase a home in the next seven to nine months. The market for homes listed at $4 million and above in the Boston metro is currently slow-moving, but we are encouraged by the national trends noted in the Trend Report.

What Buyers Want

So, what amenities are affluent buyers seeking? Turnkey properties that offer privacy, wellness amenities, lifestyle experiences and the latest technology are all in great demand. In Boston, amenitized condo buildings comparable to a vertical country club are leading the luxury market.

“We’re seeing a lot of custom interior buildouts for kitchens and baths – so these spaces feel extremely personalized to the buyer and not what you’d expect to see from a spec home,” said Ricardo Rodriguez, a Coldwell Banker Global Luxury Specialist affiliated with our Boston-Back Bay office. “It’s gone from a standard checklist of amenities – the gym, the pool, the concierge, etc. – to a bespoke set of amenities and social programming that define a complete lifestyle for a specific buyer profile.”

Rodriguez represents several luxury boutique developments, including The Residences at 566, developed by New Boston Ventures, and several others slated for debut in 2024.

High-end developers are now incorporating private restaurants and food programs developed by Michelin-star chefs, such as The Noanet Group’s Raffles in Boston, where sales are being handled by The Collaborative Cos. The COVID-19 pandemic caused a shift toward Boston buyers wanting a sanctuary in the city, with outdoor spaces, wellness amenities and privacy.

Rodriguez points to The Residences at 566 as an example. Set in the South End, the luxury boutique condominium building consists of only 66 one- to three-bedroom condos ranging from the $900,000 range to $3.5 million. The Residences at 566 are complete with concierge services, outdoor and indoor gyms, a rooftop yoga deck, city-view lounge, sun deck, meditation terrace, outdoor dining and grilling areas, pet spa, herb garden and garage parking with EV chargers.

“People want new construction, amenities and technology, but in my experience, they want it all in a boutique environment,” said Rodriguez. “Stealth wealth is driving a lot of their decisions. They don’t want flashy. They want a more personal and intimate experience.”

This is the reason, he theorizes, that buildings with fewer than 200 units tend to be in higher demand than larger buildings. Examples include The Residences at 566, which went to market in the beginning of January 2022 and was 90 percent sold pre-construction and Raffles, a 35-story building of 146 residences and 147 hotel rooms that was at least 80 percent sold pre-construction.

HENRY Goes to Boston

The Coldwell Banker Global Luxury 2024 Trend Report also noted the rise of “HENRYs,” or “High Earners Not Rich Yet” – typically Millennial and Gen X individuals who earn over $250,000 per year. Over the next five years, many are expected to become first-time luxury homebuyers. In Boston, the year-over-year growth for HENRYs between 2021 and 2022 was 13.8 percent for residents earning $250,000, 13.1 percent for those earning between $250,000 and $500,000, 14.4 percent for those making $500,000 to $1 million and 15.1 percent for people earning $1 million-plus.

Pauline Bennett

Boston continues to be an investment haven for international buyers, as well. Within the top 5 percent of the real estate market, the city ranks in the top five locations for buyers from China, Hong Kong and Switzerland. Within the Top 10 percent of the market, Boston was the third most popular location for Chinese buyers.

We are optimistic that 2024 will be a year of positive, gradual change for the luxury real estate landscape. Wealthy Americans appear to have already adjusted to the new normal of higher interest rates and prices, judging by the bump in sales at the end of 2023. Affluent respondents to our Coldwell Banker Global Luxury survey stated that they are more likely to list their homes within the next 12 months; 36 percent think 2024 will be a better time to buy or sell compared to 18 percent of non-luxury consumers. The luxury real estate market remains resilient and there are plenty of opportunities for buyers and sellers in 2024. Longterm, we hope this signifies greater balance at all price levels.

Pauline Bennett is the Northeast regional president at Coldwell Banker Realty.