San Diego is already an affluent market, and with the extreme weather conditions now affecting the rest of the country year-round, we have to look like a fantastic upgrade to people who just came into some big money. From Leonard Steinberg, the Compass chief evangelist:
Over $82 TRILLION will transfer from older to younger generations in the US over the next twenty years…..that is over $4 trillion of stimulus per year, every year, for the next 20 years!
Over the next 10 years, 1.2 million people worth at least $5 million will transfer an estimated $31 trillion to their heirs and about two-thirds of that extraordinary amount of wealth – or $19.9 trillion – is forecast to be passed on by 2033 by about 155,000 individuals with a net worth of $30 million or more according to research firm Altrata. That is MULTIPLES of the amount of stimulus spent on ALL Americans during COVID that many attribute to spiking inflation…..concentrated in a much, much smaller group, mostly wealthier already.
Yes, luxury market pricing could grow well beyond our imagination.
What might this do to luxury real estate? It’s very possible that we’re about to enter an era of RUNAWAY Luxe-flation. The ability for markets to keep up the supply for this growing demand is almost certain to trigger massive price hikes. That $1,000 per night hotel room that is now $1,750 per night could easily go to $3,000. That $50 million Palm Beach mansion that now sells for $100 million could become a $250 million mansion. Yes, luxury and ultra luxury markets will see massive infusions of capital that may result in lowered buying power per dollar as prices soar.
If this capital infusion is not limited to luxury markets and spreads into other markets that simply cannot afford the higher prices, we may have a problem. Sadly, the pressures for less-wealthy people to squander their money on things that buy them perceived status keeps growing. If builders focus more on more profitable, more expensive properties, everyone else will suffer the consequences too.
Manhattan’s deepest-pocketed home buyers had a busy second quarter, with a growing number of deals made on luxury properties whose prices slipped, according to several reports from New York City brokerages Tuesday.
“The luxury market continued to defy expectations, with the $10 million to $20 million and $20 million-plus price brackets showing significant increases in signed contracts,” Compass said in its report.
Year over year, contracts surged more than 32% on homes priced between $10 million and $20 million. And for the exclusive $20 million-plus market, contracts ticked up 8.3% in the same time, the firm found.
“There is more wealth in the world than ever,” said Compass’s Brian K. Lewis in the firm’s report. “Many investors see tremendous value to be had among the highest-end NYC properties. These buyers are bullish on NYC in the long run, and they invest their money into assets where they sense value.”
> $4 trillion of stimulus per year, every year, for the next 20 years!
Not “stimulus.” This is stocks, properties, etc. Assets. Changing the name on the paperwork enriches a few lawyers but that’s it unless those assets are disposed of and the proceeds go somewhere different. Every modest inheritance we’ve received just reshuffled allocations within our existing portfolios.
I’m a bit skeptical that at these prices that the investment component of real estate will prove attractive for the vast portion of this generational wealth transfer.
I’m a bit skeptical that at these prices that the investment component of real estate will prove attractive for the vast portion of this generational wealth transfer.
I’m counting on the trust-funders who never worked a day in their life and were spoiled all the way through. They have no business sense and need to Get Good Help! One-third of the total? Half?