It’s no secret that Americans are grappling with grave economic implications across myriad of industries. As inflation and energy prices hit new highs, many of our biggest business sectors experience slowed growth and stagnant sales. Sectors hit hardest often include discretionary categories like electronics, clothes, or furniture. Therefore, it’s not surprising that the market for luxury homes may be headed for hard times.
With natural gas prices at a 14-year-high and gasoline up 43 percent from last year, effects on real estate are apparent. From lumber prices to labor scarcities, energy costs influence the market in many ways. This is a problem that isn’t going anywhere.
So, how are businesses coping with the realities of runaway inflation and energy costs? Well, we took time to speak with a couple of local luxury home companies to understand ways in which they’re mitigating against this market disruption.
The Modern Way to Own a Luxury Home
Crissy Bruchey, Consumer Communications Manager at Pacaso sees different solutions for the future of luxury living. With the Pacaso platform, luxury and second homes are shared between a pool of two to eight people. This model allows multiple interest to share expenses.
‘Instead of eight homes needing lumber, lights on, etc.,” says Crissy, “We consolidate those needs into one home.”
This theory also applies to the increased demand that’s decimated inventory.
“Following the shift to work from home,” says Crissy. “There are higher levels of demand for homes in destination communities. This demand on top of short supply has driven up home prices to unprecedented levels. Instead of eight-second home buyers buying eight separate median-priced homes, which drives up prices even further, Pacaso consolidates those eight buyers into one luxury home. This alleviates pressure at the median-priced tier.”
Understanding the Luxury Buyer
Alan Hoffmann is President of Hoffmann Homes, Four Tree Development, and serves as a Technical Advisor to the City of Dallas’s Environmental Division. He develops many of Dallas’s luxury homes and has a unique perspective on how to cut costs in this climate.
For Alan, it all begins with the client.
“On a luxury home,” says Alan. “You typically have a luxury client. These people read magazines like Houzz and Google the latest in luxury products. So when Sub-Zero drops a new product, they know about it. They want it added to their appliance package. With the shipping and materials being so volatile, this can add 15 months to the build.”
And those 15 months can really add up in terms of cost. Especially when you’re working against interest.
“For us, the biggest way to mitigate costs on a luxury home,” says Alan. “Is to lock everything in upfront and don’t make any changes to the build halfway through.”
As with any tough economic climate, creativity is your best defense against the deterrents of inflation and energy cost increases. Thankfully, there’s never been a better time to adjust with smart solutions and the people who know just how to get the most from the building process.
