The lack of state income tax in Texas and Florida will help those states’ luxury markets retain their luster, he says, while tax increases in countries as disparate as Oman, Ireland, and Canada, which just instituted a 1% tax on the value of homes held by nonresident, non-Canadian owners, could adversely impact luxury prices.
Finally, Nelson says the biggest impact on luxury real estate is gradually going to become apparent over the next five years: “Transacting in crypto,” he says, “is going to grow in exponential ways.”
It’s only logical, he says.
“If wealth creation drives a market, and crypto is driving wealth creation, then I think there’s going to be an increased demand for that kind of payment, as opposed to cash.”
Supply Crunch
What could slow the luxury housing juggernaut? Lack of supply.
“What a wonderful time to be a property developer,” says Nelson.
“If you’re building a luxury condo development that’s going to deliver a substantial number of new listings and inventory in 2022, I think you’ll look back at this moment in five years and think you were a genius.”
There’s the possibility, he continues, that inventory will open up only when prices become too high for homeowners to ignore.
“The question is: When does the market unlock, and supply and demand equal out again?” It is, he concludes, the same as asking, “How high do prices have to go where someone who owns multiple properties says, ‘The demand is so high, it’s time to sell?”
This article was provided by Bloomberg News.