Rising demand for luxury real estate charged by pandemic, other factors

The real estate market for high-end homes is changing, with a stronger emphasis on new construction and more spacious areas, and for the average Longboat Key buyer, time is more important than money. 

In the past year, luxury real estate sales continued to trend upward. At the same time, the emerging ultra-luxury category is making a more profound impact in the Longboat Key market. Realtors tasked with selling these properties say factors like the timeline of the COVID-19 pandemic have influenced these sales. 

“As a result of COVID and pricing, we are seeing more than ever the ultra luxury for our market,” said Ryan Ackerman, co-president of the Ackerman Group, an area real estate firm. “There's more and more homes and condos for sale than we’ve ever seen in the luxury and ultra luxury on Longboat Key.”

High-end real estate, or luxury real estate, is commonly defined as listings over $5 million. A new emerging category, ultra luxury, are those homes that exceed $10 million. 

There are currently 22 homes for sale in Longboat Key defined as luxury homes, though some may still be under construction. Year to date, there have been 14 homes over $5 million sold on Longboat Key. In 2022, there were 11 sales of that nature and 21 in 2021. No homes over $15 million have closed on Longboat in the past three years, according to the Ackerman Group. 

For the luxury market, the most common theme is that buyers tend to like the newest or most updated buildings, especially if they’re already built. Roger Pettingell, a Realtor specializing in luxury waterfront properties, said most Longboat buyers hold the sentiment that time is more valuable than money. 

Buyers, then, are willing to spend more money on new and updated properties than spend less on a dated site and wait for renovations. Supply-chain issues and worker shortages heightened by the pandemic exacerbated this sentiment. 

Newly constructed single-family homes or resale homes that have been newly updated are the cream of the crop, according to Ackerman. 

“We are still seeing on Longboat Key, very, very very strong pricing for units that have been updated or single-family homes that are new,” Ackerman said. 

He also said that resale homes that are a bit more dated on the inside or maybe are not waterfront tend to sit longer than the newer properties. 

The rise of Ultra-luxury home sales is caused by the lack of inventory in the market the past few years, according to Barbara Ackerman of The Ackerman Group. 

The sales of luxury homes are more common now because the inventory just wasn’t quite there previously, according to both the Ackerman Group and Pettingell. 

“Our market is not a presale market, and that’s the challenge we always run against … our buyer profile tends to want to touch and feel the final product before really truly committing to it,” Ryan Ackerman said.

The only exception to the desire to physically see a property before buying are upscale condo developments, such as the Sage Residences and St. Regis. The emergence of these higher-end developments goes hand-in-hand with the fact that the definitions of luxury are evolving. 

“I don’t think it was that the market for it was never there, the product just wasn’t there,” Pettingell said. “So when that came, you saw these big numbers.”

Of the 14 sales over $5 million so far in 2023, 11 were at the Sage. A unit with 4,007 square feet that is available now at the Sage is listed for $7.2 million, which comes to $1,797 per square foot.

“There is a form of immediate gratification that people want,” Barbara Ackerman said. “The St. Regis, people were willing to wait for that high-end, prestigious type of location.”

The same can’t be said for vacant lots, or buildings nowhere near completed. Barbara Ackerman said buyers aren’t as patient for those. 

Pettingell also mentioned that the pandemic increased the demand for those luxury homes because of the shift in behavior toward working from home. Those buyers looking to purchase their second or third home could now do so in Florida, and work remotely. This also increased the desire for more space. 

The frequency of buyers is another market behavior that has changed in recent years, according to the Ackermans. 

“We’re not a seasonal market anymore like it used to be,” Ryan Ackerman said. “COVID just helped solidify that. I think that’s the good news. Buyers are looking all the time now.”

While the future of the market is uncertain, the Ackermans predict that it will remain strong. Ryan Ackerman said that the upcoming presidential election may create a slight pause, as usually happens with elections. The stock market is always a factor, he said, and changes in the stock market could collide with the election as well. 

Pettingell agreed with the fact that the stock market would have an impact on the future of the market, especially since it drives the wealth of many of the area’s buyers. He also predicted that the cost to build won’t have much room to decrease, so pricing would reflect that.