Why has the number of homes sold for more than $1 million kept climbing since the pandemic started? Turns out, the trend has multiple causes, Realtors explain.
The Lakewood Ranch luxury housing market was already on the rise when the COVID-19 pandemic hit Florida and the rest of the U.S. in March 2020.
A year and a half later, Realtors say it is exploding, and the numbers back them up.
In 2018, 35 homes were sold in Lakewood Ranch for $1 million or more. Through June 21, the number of homes sold for more than $1 million in 2021 had already reached 61, putting Lakewood Ranch on pace for 129 sales in that range by the end of the year.
Michael Saunders & Co.’s Tina Ciaccio says Lakewood Ranch homes have been undervalued for years, even as recently as 2018. As more people started moving to Florida, Lakewood Ranch has become a better-known community. She doesn’t expect prices to dip back down.
“We’re seeing people come here from Chicago, San Francisco, and they think our pricing is just so low,” Ciaccio says.
Laura Stavola, from Premier Sotheby’s, says the luxury market didn’t truly take off until the COVID-19 pandemic hit. After years of people downsizing, suddenly they wanted a second office or a Zoom room to work from home. Compared to crowded urban real estate, Lakewood Ranch offered more buying power.
“They’re moving from a multimillion-dollar apartment, and you can turn around and purchase a 5,000-square-foot home for less money,” Stavola says.
Some people found their employers were willing to let them relocate anywhere in the U.S. and work remotely. Florida has been a popular choice because of the weather and the lack of state income tax, according to Stavola.
“I think it’s made people really start to appreciate where they live,” Stavola says. “If they’re going to invest that much time in their home, they’re willing to make a larger investment on the property itself.”
Coldwell Banker Realty’s Roger Pettingell says that when the pandemic started, more people became interested in making Florida their full-time home, rather than traveling to and from the north every winter. Not only has this resulted in more buyers but also buyers who are willing to spend more because they are more invested in their home when staying there all year-round.
Lakewood Ranch Realty’s Kevin Bryceland says there has been an increase in luxury real estate sales partly because people realized they could buy a bigger, nicer home in Lakewood Ranch for the same amount of money compared to more mature markets, such as Tampa-St. Petersburg and Naples. Plus, they would still have access to visit those two areas as well as renowned beaches including Siesta Key.
But getting more house for their buck is just one part of the equation. On the construction side, builders have remained in tune with buyers’ needs at that price point.
Ciaccio says homebuilders have been responding to buyers’ desire for luxury amenities: beautiful lanais; in-home refuge spaces, such as yoga dens; oversized kitchen space for hosting people; and more. She also says more people are buying multigenerational homes, which is another factor behind the increase in homes sold for more than $1 million.
As homebuilders have constructed more homes with luxury amenities, Ciaccio says current homeowners who want to sell have shown an increased willingness to make improvements to their own homes to better compete with new construction.
Another piece of the equation comes directly from your economics 101 class: supply and demand.
Donna Soda of The Soda Group says a decrease in homes on the market is behind the sharp rise in homes sold for more than $1 million. For one, developers are running out of land for custom lots. Supply shortages have also limited the number of houses developers can build. Relatedly, she says homeowners who aren’t moving out of state aren’t selling their homes because there are few places to go in Florida right now. Most luxury homes are being sold within one to five days of hitting the market, she says.
“The ones that are selling, they’re taking advantage of the market,” Soda says. “They know they can get their number or maybe more.”
Another reason the luxury real estate market has heated up so quickly, Pettingell says, is because people have become wealthier by investing in the stock market, which has largely continued to rise since the 2008 recession. More people than ever before are willing to pay for expensive homes in cash, which is appealing to sellers.
“On the other hand, it’s a way to protect that wealth,” Pettingell says. “At some point, the stock market’s going to correct or not go up forever. Then you’ll have these losses in paper instruments and not something tangible like a home in Florida. It gives you a chance to diversify some of those earnings.”
Stavola says people have realized they can find many of the amenities they’re used to in the big city — arts and culture, shopping, restaurants — while combining it with a resortlike lifestyle, with golf courses, beaches and polo matches.
Bryceland says Lakewood Ranch earning the No. 1 ranking among master-planned, multigenerational communities nationwide has helped put Lakewood Ranch firmly on the map over the past few years. Recently, the community dropped the “multigenerational” qualifier to that distinction, when real estate consultant RCLCO announced Lakewood Ranch is the top-selling master-planned community in the country.
“Retirees or people who just want to move to Florida, I don’t think they know where to move to in Florida,” Bryceland says. “So when you start doing searches, where’s No. 1? Or if you’re doing a Google search and saying, ‘Where’s the best place to live in Florida?’ Lakewood Ranch, it just keeps popping up for people.”
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