The impacts of the Covid-19 pandemic have had a major effect on the housing market in totality, increasing the median prices of houses on the market due to a shortage of homes. Yet the luxury real estate market has not seen as much of a shortage, which led some sellers to see their properties sit on listings for longer than is ideal. This led to the shift from traditional real estate sales to luxury real estate auctions.
Luxury real estate auctions are a selling strategy that shortens the amount of selling time which is part of what makes it increasingly popular among sellers. The process is done in partnership with an auction firm that markets the property to highly qualified buyers and ensures that the auction process, and transaction, run smoothly. In the 4th quarter of 2021, new listings for luxury properties grew by 15.8% compared to previous years, with many of these listings using real estate auctions to ensure success. Of course, these numbers vary from city to city, so we’ve compiled the cities that have the most luxury real estate auctions as well as the source of the increase.
New York City, New York
Manhattan, located in New York City, has some of the most expensive real estate in the United States, even with regards to mid-size or affordable real estate. The top listing for New York sold for $90,000,000, and although that was sure to be an impressive property, you won’t get the square footage that you see in other areas of the country. Still, because of Manhattan’s culture and commerce, the never-ending allure of Park Avenue, and the increasingly limited inventory for real estate, the properties are selling for multi-millions. The starting point for luxury property lands at around $6,500,000 and the incredible penthouse accommodations and amenities and surely part of the pull.
The pandemic’s impact on the country can be felt in almost every city, but nowhere more than in New York. As the epicenter of the covid-19 pandemic, New York City has changed, and this includes the way the real estate market functions. No longer do buyers want to tour innumerable spaces and meet countless sellers, which is why luxury real estate auctions have become the go-to for both buyers and sellers as the process relies more on virtual communication. Elite auction firms vet all potential buyers, and those individuals get a full view of the property, the other buyers interested, and their bids while only a few tour the space in-person and often no more than once.
Los Angeles, California
The luxury housing market saw a spike in buyers purchasing a second home due to virtual work flexibility, and it seemed there was no better place to get ample space and sun than in the 90210 zip code and its surrounding neighborhoods. With luxury homes ranging from the golden age of Hollywood villas to brand new estates with ultra-sleek and modern designs, it’s no wonder that many looked to the west to find their next investment.
As the starting point for luxury properties at $4,499,000, these are most certainly the homes of the rich and famous. The top sales reported for luxury real estate in Los Angeles in 2022 were conveniently named “The One”. A property featuring 22 bedrooms and 49 bathrooms, it sold at a no reserve auction for $141,000,000 to Fashion Nova CEO Richard Saghian. Although “The One” was a unique property in many ways, its buyer was one of many who found success through luxury real estate auctions.
The beachfront properties, opulent design, and rich Hispanic culture of Miami Florida are part of what makes this city so fraught with luxury real estate. Miami’s luxury real estate market has a relatively large range of pricing starting at $1,800,000 and going up to $29,500,000. Due to the influx of buyers, sellers are finding it easy to find highly qualified buyers for almost any luxury property.
Many of the US’s most elite are moving to Florida and Texas as these states have no income tax, which makes claiming a primary residence ultra-appealing. However, Florida offers lower construction costs as compared to the south, so many believe it to be the smarter financial decision. The tax benefits and construction cost savings are only part of what makes Florida such a smart move for luxury real estate investment. In Miami, luxury home sales rose by a staggering 101.1% between the years 2020 and 2021, and now in 2022, it’s firmly a seller’s market with luxury real estate auctions becoming increasingly popular particularly when buyers have yet to move in-state.
San Francisco, California
San Francisco’s starting point for luxury properties may only be a little over 3 million, but the proven resilience of its real estate market along with the fact that the city is only seven miles keeps demand high and supply low creating a highly attractive investment for buyers. As it’s smaller they don’t have the “most” luxury real estate auctions, but they do have some of the most appealing. The city by the bay’s top listing was $25,800,000, and many buyers have been able to capitalize on the effects of Covid buying millions under the initial asking price.
Australian Cities Auctioning Luxury Real Estate
Both Sydney and Melbourne in Australia showed incredible results for luxury real estate public auditions. Peter Baldwin, the chief auctioneer at Richardson & Wrench, believes that their high rate of auctions is due to the market and culture preference for transparency and openness. With over 25 years in the business, Baldwin has auctioned off over 35,000 properties which all sold in under 15 minutes. Baldwin goes on to say that many of the buyers are foreign which adds ease for them as much of the process is virtual but also because … “we like this idea that you have to show up and compete for the property”. Most of the auction luxury homes are done so with a reserve price although with properties that are above $20 million there is some flexibility.
The luxury home auction process is becoming vital, not only to the US housing market, but to markets abroad, and each city here is the pinnacle of luxury real estate.