Home sales are lagging. Although economists (as did I) predicted around 4.60 million existing home sales for 2024, that number is now expected to end the year at 3.84 million units [according to NAR September report]. This represents a 6.1% decline from 2023, which was already the worst year we had seen since 1995. Bear in mind that the US population has grown by 28% in the last 30 years, which further frames the dramatic drop.
Yet, in a year of surprises, LandVest’s revenue from luxury real estate is up 40% through September, compared to the same period for 2023. In fact, since the peak of the market in 2021, LandVest’s revenue has consistently outpaced the overall market by a significant clip.
Why is that? I’m not sure, but I attribute it to three factors:
First, LandVest has invested significantly in our growth and marketing over the past three years. As the market peaked in 2021, we poured capital into our marketing program and office expansion initiatives to drive revenue when other brands were retreating. We are now experiencing the dividends of those investments.
Second, the luxury real estate market doesn’t always align with the broader asset class. Our clientele tends to operate with more mobility than the middle-market home consumer. This allows them to act on expected trends in the market. With the Federal Reserve signaling broader rate cuts in the next six months, there is a perception that the fall and winter of 2024 will provide buying opportunities which may not be extant in a more competitive spring market. A recent survey found that Wall Street Journal readers are allotting $154,000 more for an upcoming home purchase than a year ago.
Third, is tax planning. With uncertainties around the next administration, wealthy Boomers are considering the accumulated gains in their real estate portfolios. With the possibility of an increase in the capital gains rate, many are electing to crystallize their returns prior to the end of 2024.
Whatever the case, LandVest continues to see a surprisingly brisk level of activity for the fall. In my next quarterly installment, I will examine the full year-end results and see whether we were right.
