As the housing market continues to experience fluctuations and interest rate hikes, one might think that the Coronado real estate market would be affected by these changes.
However, interest rates, unlike economic conditions or geopolitical events, don’t matter as much in luxury real estate markets as they do in other areas of the housing market.
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Markets like Coronado are less affected by rising interest rates, as high-end buyers aren’t as sensitive to these changes.
Instead, they are more motivated by lifestyle and location factors.
For many of these buyers, the ability to purchase a high-end property is not determined by whether interest rates are low or high, but rather by their personal financial situation.
Second homes, investments
This is because luxury homes are often purchased as second homes or investments, rather than primary residences.
Of course, rising interest rates may still have some impact on the Coronado housing market, but I believe the impact is often less significant in comparison to the broader market.
Also, real estate markets are complex and there are factors that can influence the demand for luxury properties.
Some things to consider as homebuyers are affordability.
I’ve worked with high-end buyers who have significant financial resources, and they are less affected by rising interest rates compared to first-time homebuyers or middle-class buyers.
Coronado doesn’t fit mold
However, Coronado doesn’t fit that mold as Census records show the median household income on the island is $114,559.
In addition, buyers in the luxury market are typically less concerned with monthly payments and are more focused on the overall value of the property.
In Coronado, there’s a limited inventory of homes and luxury properties are often unique and difficult to replicate.
This scarcity can create a sense of urgency among buyers.
So, even if interest rates rise, buyers in Coronado are still willing to pay a premium to secure a desirable property.
Investment potential
Another factor is investment potential.
I’ve found high-end properties are often seen as a safe haven for investors looking to preserve their wealth and generate income, regardless of interest rates.
And luxury real estate is also often viewed as a tangible asset that can provide a hedge against inflation, making it a relatively stable and predictable investment.
Lastly, more than half of the buyers in Coronado are cash buyers who do not need to rely on financing to purchase a property.
Because of that, changes in interest rates are less relevant to their decision-making process.
To learn more information, visit simonerealestategroup.com or call 619-568-0568
Corey Simone leads the Simone Real Estate Group and is an advertiser with The Coronado News.
