The ultra-luxury real estate market in the usa is warming up in 2024, in stark contrast to the still cool ordinary property market.

According to the latest report, with the rise of US stocks bringing a wealth effect and increasing expectations for interest rate cuts this year, sales of luxury homes priced at 0.1 billion USD are expected to double this year. As of July 15, six residences valued at over 0.1 billion USD have already been sold in the usa. If this sales pace continues, the total for this year will exceed last year and is expected to break the historical record of nine properties set in 2021.

According to data from real estate evaluation and research firm Miller Samuel, although the nine-figure club is a small group, sales of properties priced at 50 million USD, 20 million USD, and even 10 million USD are showing a strong rebound. Bay Area real estate agent Nathalie de Saint Andrieu stated, "What has surprised me the most so far in 2024 is the number of qualified buyers willing to pay high prices for these super luxurious properties, indicating that there is a significant flow of funds at the highest end of the market."

This recovery sharply contrasts with the national real estate market, which still bears the pressure of high mortgage rates and insufficient supply. Jonathan Miller, CEO of Miller Samuel, stated, "Luxury home sales are significantly increasing, while we see no such situation in the ordinary real estate market across the usa."

The underlying reason for the gradual recovery of luxury homes while ordinary properties remain sluggish is due to high interest rates and the wealth effect of the stock market.

The trends in the ultra-luxury real estate market and the ordinary property market are completely different, showing that the forces driving the high-end economy and other areas of the economy are very diverse.

1) The general public is trapped by high-interest loans, while the wealthy are buying homes with cash.

The national real estate market fluctuates with changes in mortgage rates. When rates rise, property prices and home sales typically decline because the cost of borrowing to buy a home increases; when rates fall, property prices and home sales usually increase. In the shadow of high rates in the usa, affordability for housing is at a historic low.

Many people in the usa have bought homes when rates were lower and locked in low mortgage rates. Now that rates have risen, they are unwilling to sell their homes and refinance to purchase new ones because they would face higher borrowing costs after selling.

However, the super-rich can buy homes outright with cash, without needing to borrow. Therefore, changes in mortgage rates have little effect on them, especially during high-rate periods, as they are more inclined to buy homes with cash to avoid the costs associated with high-rate loans.

Miller Samuel stated that this spring, two-thirds of transactions in manhattan's property market were made with cash. In the luxury property market, this proportion is even higher.

(2) The new high in us stocks has brought a wealth effect to the wealthy.

Moreover, the confidence (and cash) of wealthy buyers mainly comes from the stock market. This summer, major stock indices in the usa reached new highs repeatedly, technology stocks surged to historical peaks, creating trillions of dollars in stock wealth, which has provided the super-rich with more funds and a willingness to purchase ultra-luxury properties, thus driving the recovery of the ultra-luxury real estate market. Miller stated:

"The ultra-luxury real estate market has almost completely detached from the typical real estate market. It is a global market, not a local one. It acts more like a barometer for the health of the global financial market."

(3) The younger generation has inherited a substantial amount of wealth from their families.

In the coming years, as the older generation of wealthy individuals pass away, their immense wealth will gradually be inherited by the next generation. This wealth includes cash, real estate, investments, etc., amounting to approximately 80 trillion USD. The younger generation (millennials and Generation Z) has inherited a substantial amount of wealth from their families, giving them more funds to purchase properties.

Daniel de la Vega, CEO of One Commercial Real Estate, stated that in South Florida, the number of millennials (born around 1981 to 1996) and Generation Z (born after 1997) purchasing apartments has surged. Many of these young buyers are using family trust funds to buy homes. He said, 'These young buyers prefer to purchase properties in new development projects, with some even buying without seeing the properties, especially favoring high-end residences backed by brands.'

4) The COVID-19 pandemic has driven increased demand among the wealthy.

De la Vega also pointed out another trend driving the sale of ultra-luxury residences is the increased demand for larger residences. After the COVID-19 pandemic, the demands of wealthy buyers have changed. They want all their favorite living amenities within their own residences and no longer need to go out.

These wealthy buyers hope to have a gym and spa at home for their workouts and relaxation. They also wish to have an office to handle work matters from home. Entertainment spaces are also one of their needs for hosting guests or enjoying leisure time. They would like dedicated areas to showcase their art collections and autos.

5) The strong rise in financial markets has offset the impact of the presidential election on luxury homes.

Typically, before presidential elections, the high-end real estate market experiences a temporary stall as buyers wait for more certainty. However, the current strong financial market seems to have offset the election's uncertainties, although the situation in the second half of the year remains far from settled. Miller stated, 'At least based on the activity we have seen this year, the election appears to have had little impact on the ultra-luxury real estate market.'

Luxury home prices in the usa are rising.

Data shows that the price of luxury condos in South Florida increased by 33% this year, reaching $3,451 per square foot; single-family home prices rose by 11%, reaching $2,485.

The CEO of One Commercial Real Estate, de la Vega, stated, "Previously, the larger the house, the lower the price per square foot. Now the situation is exactly the opposite. We have never seen numbers like these. It's simply astronomical."

For example, Manhattan completed two major trades in the past month. One was a penthouse in Central Park Tower, the tallest residential building in the world, sold for $0.115 billion to an unnamed buyer. The penthouse in Aman New York was sold for $0.135 billion to Russian billionaire Vladislav Doronin, who founded the development company that built the building, so he actually bought the building from his own company.

In Palm Beach, Florida, the only private island, Tarpon Island, was sold for $0.15 billion in May, while Oakley founder James Jannard sold his mansion in Malibu for $0.21 billion, setting a record for the most expensive property in California. Even San Francisco is experiencing a super-luxury real estate boom, as billionaire Laurene Powell Jobs, the widow of Steve Jobs, recently purchased the most expensive residence in San Francisco for $70 million.

The luxury market also shows strong momentum. According to data from the real estate website Redfin, as of the end of June, sales of residences priced over $5 million exceeded 4,000 units, an increase of 13% year-on-year. Mike Golden, co-founder of Chicago real estate company @properties, stated, "This year's start is stronger and more robust than anyone expected."

According to Christie's 2024 Mid-Year Luxury Real Estate Outlook, demand in high-end markets nationwide is strong. The report states that in Naples, Florida, sales of properties over $10 million increased by 14% in the first quarter, while in Montana, sales of homes over $4 million increased by 50% as of early May.