The stagnant 2024 real estate market is another real estate industry that can’t wait to get off the ground, but that’s not the case with the niche luxury market.
The 2025 Red Paper appears The Agency shows the luxury market is making a sharp difference from the existing broader home sales market, which can reach near historic lows at less than 4 million sales.
The number of homes sold for $1 million or more increased 5.2% in the first quarter of 2024, and luxury home prices jumped 14.2%. That compares to a 12.9% drop in overall home sales and a 5% increase in the median price.
Higher mortgage rates have stalled the broader housing market in 2024, but the luxury sector is said to be unchanged because wealthier buyers are less likely to need a mortgage. According to the report, nearly half of all luxury purchases in the first quarter of 2024 were made with cash.
And the rich are getting richer because of the booming stock market. The S&P 500 is up 26.9% so far in 2024, while the Dow Jones is up 17.9%. Luxury buyers who were already home owners also saw a rise in home prices.
Looking ahead to 2025, the Agency says geopolitics will have an impact on the luxury market. The escalating wars around the world and the politicians who win elections can change when the super rich want to park their money.
That’s not really bad for the luxury market in the United States. The passing of the presidential election may give buyers and sellers more clarity on US policy, and international turmoil may push the wealthy into the US if it appears to be settling down.
And even as international buyers clear out, the Agency says the transfer of generational wealth will drive the luxury market. According to the report, about $31 trillion of wealth will be transferred by 1.2 million people in the next 10 years, and $20 trillion of that is estimated at 155,000.
Most of the wealth will go to older Millennials and younger members of Gen X.
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