Executive Summary

• A Market in transition. The luxury property sector is showing signs of a reset following an unprecedented homebuying boom during 2020 and 2021. Emerging from the pandemic, highnet-worth buyers have shifted their focus. Rising interest rates, inflation, and increasing economic uncertainty have also softened demand from 2021.

• Real Estate as a long-term Investment. The high-end real estate market is still in a strong position for 2022 and 2023. Luxury single-family home prices have seen 60% appreciation since 2017 while luxury attached home prices increased nearly 41%. According to a survey of over 2,000 U.S.-based affluent individuals conducted by Censuswide and the Coldwell Banker Global Luxury program, four in five (80%) affluent respondents believe that real estate is a safe investment.

• Not Quite a Buyer’s Market. The majority of luxury home markets analyzed for The Trend Report were still seller’s markets as of August 2022 – but conditions are gradually shifting in buyers’ favor. Property hunters have more negotiating power, but they still have to contend with low inventory and high prices.

• Demand for Smaller Homes Rises. Affluent buyers appear to be turning toward smaller properties, including secondary and investment homes. An analysis of 20 U.S. markets between April and August 2022 reveals that luxury single-family homes with smaller footprints (2,500 to 3,500 square feet) sold 18.6% faster than larger single-family homes (4,500 to 5,000 square feet).

• Second Thoughts Could Spark Moves. About 25% of survey respondents who purchased a home in the last two years said they were not satisfied with their home purchase. Driven by investment priorities and quality of life, they could be on the move again. The locations they’re most interested in? New York and California.

• Seeking Stability. The wealthy may be gravitating toward real estate that gives them financial, emotional, or psychological stability in the face of rising uncertainty. They’ll be looking to diversify their real estate portfolios, create long-term generational wealth, make opportunistic buys in traditional luxury centers, or seek properties in locations less affected by climate change and extreme weather.

• Global Property Buying is Back. The affluent are returning to global property buying. About 92% of U.S.-based respondents are now considering purchasing a property abroad. A strong U.S. dollar, rising cost of living, surging home prices, and political climate at home are among their chief reasons for their interest overseas.

• High-Net-Worth Hedging Set to Grow. The newly minted millionaires of the last two years are not only diversifying their real estate assets, but also looking to lessen their exposure to higher interest rates in the short-term by using cash and other creative financing options.