As interest rates dipped in the last two quarters of this year, the real estate market made a small push to try to equal its growth from last year. No market has felt that resurgence more than the luxury home market, especially when it comes to new construction.
Buyers have used the ability to finance at lower rates to upgrade their living conditions into larger, newer, and more advanced homes. In Dallas, Texas, for example, new home sales priced over $400,000 are up 56% over last year and new construction starts have increased from around 1,000 to over 5,000 in the last five years. Most of these new constructions are in the luxury home markets of Highland Park, University Park, and others, where lots typically go for 150K-250K, and there is a race to snap up luxury home sites. This is the case in other major metropolitan areas, especially in those where space is at a premium, good school districts are located, and that feature amenities such as restaurants and parks close by.
As this market has heated up, it has left a void in other markets, namely the properties that need updating and renovations. In Dallas, because of the breadth of new developments, very good bargains are to be had in properties that are not updated. As the luxury new home market becomes more and more competitive, those who pick up homes in desirable areas that need a little attention could be positioned well in the coming years.