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Second Quarter Luxury Real Estate: Time on Market Will Increase for Luxury Listings

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The luxury property market is clearly slowing down.

Whether it’s the impact of rising US mortgage rates by 5.8 percent, stock markets around the world in a correction mode, fears of a possible recession in the United States, the absence of China in outgoing global tourism, persistent supply chain problems, or the Russian war on Ukraine dominoes. effect on energy and commodity prices, all of these factors and geopolitical developments affect buyer confidence.

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For properties under $5 million, higher mortgage rates can hurt first-time or even repeat buyers.

For those homes valued at $5 million or more, the all-cash nature of the transaction may soften the landing to some extent, albeit with a prolonged time on the market for most properties. But it is obvious that the pioneers kept the best properties in recent years.

Will this slowdown free up more inventory? Absolutely.

market levels

Agents and brokers will have to be more creative in marketing and pricing, as will sellers as demand for luxury homes is returning to pre-pandemic levels.

Even property investors in the US and the world can start selling properties, adding to the glut in the market.

Another event that may affect luxury home sales in the US is the outcome of the midterm elections.

If the House and Senate switch to another party’s control in November, that outcome ends President Biden’s domestic agenda for the remainder of his term.

The fear is that many who oppose the White House will discourage the economy during the 2024 presidential election, further depressing consumer confidence.

IRONICALLY, the US Fed’s interest rate moves may succeed in taking pressure off the economy, eventually targeting the high wage, high cost of living environment.

That antidote may be necessary.

Cities like Miami, Austin and even New York’s Manhattan borough have become victims of their own success, pushing rents to highs not seen in years, adding to the inflationary environment. Bidding wars and “why me” love letters to homeowners are becoming common.

US inflation at 8.6 percent, the highest in a decade, and slow economic growth may lead to stagflation. It’s a similar story in some European markets. That’s not a pretty scenario for luxury home sales after what were arguably the best two years in the history of premium residential properties worldwide.

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