Luxury Real Estate May Be This Economy’s Best Investment

There is no real estate crisis. There is an inflationary crisis, which means all goods, services, and assets are going up in value. When investors and consumers realize this, they invest heavily in real estate to protect their money from the depreciation caused by inflation.

After months of heavy stock market declines, rapid inflation, and rising interest rates, it can be hard not to see doom and gloom on the horizon. Even as average national real estate prices are 13% higher year-to-year,(1) some economists cite the sharp drop in transaction numbers over the past 12 months(2) and reduced construction spending since August(3) as evidence the housing market is in trouble. Moises Agami and Valor Capital are holding tight to historical trends and current realities. The luxury real estate market in Tampa Bay is weathering the storm.

While many macroeconomic factors are affecting, real estate performs differently according to location and asset class. For example, while real estate prices across the nation rose 13% last year on average, in Tampa and Miami, that increase was 28% (continuing the Florida real estate explosion), and Charlotte, North Carolina, saw a 21% rise.( 2)

Some observers are saying that the reduced number of property transactions represents a lack of demand. Still, a closer look reveals that rising interest rates and other economic factors are contributing to diminished supply. “The slowdown in trade speaks to SUPPLY rather than demand,” says Valor Capital’s Moises Agami.

Rising interest rates and limited inventory deter homeowners from selling if they can avoid it. Prices are higher, and their current mortgage is likely locked in at a lower rate than they can get today. It makes sense to stay rather than sell and find a new home, and some sellers have taken their properties off the market, thereby reducing inventory.(4)

This is particularly true in the luxury housing market and families with a primary residence valued at $10 million or more. Realtors in the Hamptons and New York City see ultra-luxury buyers waiting patiently as inventory is low. Fewer homes are purchased because there are fewer for sale.(4)

Valor Capital’s luxury condominiums in Clearwater, Florida, are selling at the highest and second highest price per square foot in Pinellas County on the Gulf Coast of Florida. While Valor Capital sees fewer showings, absorption of their luxury condominium designs remains high.

Agami says, “A thorough evaluation of the present time, as well as our history in the past few decades, points to the fact that interest rates will rise and likely settle down around our historical average of 7%.”

Moises Agami goes on to say, “There is no real estate crisis. There is an inflationary crisis, which means all goods, services, and assets are going up in value. When investors and consumers realize this, they invest heavily in real estate to protect their money from the depreciation caused by inflation.”

Moises Agami’s background prepared him with valuable lessons for counteracting the effects of inflation and supply issues. He says, “I have a background in supplying vehicles and parts to dealerships and manufacturers around the world — a very rigorous process where cars always have to arrive just in time. The supply chain had to be impeccable ALL THE TIME. That meant not early and not late. We’d install about 3K vehicles per day in seven different countries around the world. We needed to have the specific parts for 25 specific models at any given time. It was very detailed and specific, and you always ran into problems — big and little — the factory that burned, or the boat that didn’t arrive on time, or a city shut down due to an earthquake – you have to be on your toes handling this stuff. That experience taught me to get to the source of any problem and figure it out. Sometimes that means reaching out overseas to a factory to convince them to get things done.”

Valor Capital is confident in the future of the Tampa Bay luxury real estate market and is expanding its developments in several locations.

About Valor Capital

Valor Capital is a team of entrepreneurs passionate about creating world-class real estate experiences. They are an affiliate: a new venture spinoff of international development firm, Terra Capital Partners SA de CV (Terra Capital Partners). With a four-decade history of real estate developments in office, hospitality, medical, commercial and luxury residential product offerings — and a multi-billion-dollar portfolio and tens of millions of square feet already developed and sold — Valor’s developments are always on the cutting edge, with proprietary antiviral engineering design used throughout the firm’s newest developments. Visit http://www.valorc.com.

References:

1.Smith, Kerry. “Case-Shiller: Home Prices in ‘Forceful Deceleration’.” OCTOBER 25, 2022, Florida Realtors, floridarealtors.org/news-media/news-articles/2022/10/case-shiller-home-prices-forceful-deceleration.

2. Olick, Diana. “Weekly mortgage demand flattens, as interest rates climb higher to 7.14%.” November 9, 2022, CNBC, cnbc.com/2022/11/09/weekly-mortgage-demand-flattens-as-interest-rates-climb-even-higher.html

3. Atrappully, Naveen. “US Construction Spending Drops for Second Month as Housing Recession Deepens.” October 4, 2022, The Epoch Times, theepochtimes.com/mkt_app/us-construction-spending-drops-for-second-month-as-housing-recession-deepens_4773602.html.
4. Vichinsky, Cody; Vichinsky, Zach. “Why the Ultra-Wealthy are Investing in Luxury Real Estate Right Now.” November 1, 2022, Nasdaq, nasdaq.com/articles/why-the-ultra-wealthy-are-investing-in-luxury-real-estate-right-now.

Share article on social media or email: