A recent article in the New York Times really did a great job of summing up the current psychology surrounding Luxury Real Estate. Spending time over the last few months in luxury markets ranging from Aspen, Colorado to Greenwich, Connecticut I witnessed firsthand the dramatic change in market sentiment and have the following observations:
1. If a homeowner is lucky enough to not be contemplating mailing in the keys, they certainly do not want to brag about it.
2. Real Estate is no longer viewed as a vehicle to achieve outsized returns and demand is completely based on real or perceived need.
3. The bottoming out process is going to take much longer than anyone realizes.
4. Representatives of the status quo are hoping against hope that the “spring market” will bring a return to normal absorption rates.
5. The volume of distressed luxury inventory is only 10% to 15% through the cycle.
When will the cycle turn? I am not sure, but it is a painful process to watch even for the lucky few who do not want or need to sell a home in this environment.