It’s the time of year when mortgage applications begin to slow down and everyone takes a collective breath for a moment. The economy is also in a time when anything could happen, especially after the unprecedented housing boom that occurred during the COVID-19 pandemic. The last year saw housing prices skyrocket and both entry-level and luxury new construction homes accelerate, only to see elevated lumber prices push construction starts back down.
So, how are luxury new construction homes doing in the real estate market today? For luxury and non-luxury homes, they’re exceeding expectations according to associate vice president of economic and industry forecasting at the Mortgage Bankers Association, Joel Kan. He says, “After adjusting for seasonal patterns, our estimate of annualized new home sales showed a jump of more than 10% from June. The housing market is still extremely competitive, and prospective buyers have increasingly turned to newly built homes because for-sale inventories remain so low.”
Kan said, “Mortgage applications for new home purchases declined in July but did come in at the second-strongest July reading since the inception of MBA’s survey in 2012. Furthermore, the average loan size again increased to a new record of $402,440. Homebuilders are still facing elevated building costs and accelerating home-price growth from the continued imbalance between supply and demand.”
That isn’t a deterrent for high-net-worth home buyers who are shopping for single-family properties as their principal residence. Prices have risen on both new construction and existing properties, but the option for a luxury new construction opens up possibilities to customize floor plans to their needs, hire an award-winning designer, and include their choice of state-of-the-art appliances and features.
During construction, it’s more cost-effective to integrate features like smart home technology and energy-efficient lighting into living spaces than retrofitting them into an existing build. That’s true for other more structural design aspects as well including a home gym or spa, an entertainment theater, or a transitional indoor/outdoor entertaining area.
What constitutes luxury living in a new home?
There’s a debate between industry professionals about what constitutes a luxury home or mansion, though. Some believe that it’s simply the dollar value of the completed build, assuming it has high-quality finishing aspects. For others, it’s about so much more.
Some believe a luxury mansion is defined by several influencing factors. Where the house is located is a consideration with places like Martha’s Vineyard and Hollywood dominating the conversation. How desirable the lot is can also differentiate it as a luxury home or not. And others yet won’t consider luxury new construction as a mansion or luxury home unless it’s been designed by an influential architect.
However, today’s standards are simply in the eye of the beholder. A new build doesn’t need Corinthian stone columns or a stately appearance to be a luxury home. It’s just as likely that a wide-open floor plan with fine finishing and premium appliances and amenities can be attractive to a home buyer.
Get a luxury mortgage at MBANC
Whether you’re looking for a finely-finished home for a half-million or a multi-million-dollar estate, MBANC can help. Our products are tailored to help you get the property you deserve, from new construction to a historic property. Find out how our Prime Jumbo Loans, Bank Statement Loans, and 10-Year Interest-Only Mortgages can help you close on your dream home, often within 30 days.