HIGH-END REAL ESTATE IN TOP MARKETS HEADED FOR ‘RESET’ IN 2019
Rising interest rates, market volatility, over-optimistic pricing create perfect storm for correction
A brewing storm of politics and economics is set to shake the market for high-end homes in top markets around the country — and the world — in 2019.
After years of strong activity, the lux market is set for a “modest reset,” Miller Samuel CEO Jonathan Miller told Mansion Global.
“It’s not a black hole, it’s the market doing what it should do,” he said.
Los Angeles’ market hit a peak in 2018 — pricing was at its highest, inventory at its lowest, and a number of flashy properties, including spec homes and sprawling estates, hit the market. Many came with eye-popping asking prices, including late media mogul Jerry Perenchio’s Bel Air estate asking $245 million and the $1 billion so-called “Mountain of Beverly Hills” development property.
Sales have slowed though. Prices seemed to have hit a point that are causing buyers to back off. Rising interest rates haven’t helped, either. Brokers widely agree that a correction is coming in the near future.
Miami, meanwhile, seems positioned to fare better than other top markets. Florida has no state income tax, which has always been a draw, but is more so now because of the recent federal tax overhaul that wiped away write-offs available to wealthy people in high-tax states like New York and California.
Still, Miami has a high inventory of high-end homes. In the third quarter, there was 45 months-worth of high-end supply along coastal Miami, according to Mansion Global. [Mansion Global] – Dennis Lynch