https://www.wsj.com/real-estate/luxury-homes/ultrawealthy-luxury-real-estate-market-e2ba71b6
The Ultra Wealthy Are Riding Out the Market Chaos in Luxury Real Estate
Despite broader economic uncertainty, major markets like New York, Miami and Aspen have seen a surge in sales for homes priced at $10 million and up
“The chance of taking a hit in the stock market is a bit too high for the reward, especially when we consider inflation,” said Herbatschek, an applied mathematician and tech-company founder. “Real estate is safer, less volatile.”
True or false?
Does real estate avoid the potential havoc of tariffs?
What say ye?
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It’s just a news story. Maybe of some general interest like “Lifestyles of the Rich & Famous.”
The reality is: It doesn’t matter to them. They already own the majority of all the investible assets. Stocks, real estate and the bond market. They also own, via their private property, the cash flow of the entire economy so if all their stuff were to crash or just be confiscated, by the end of the week they’d be at the very least multi-millionaires. Today they like real estate. Tomorrow…? A grilled cheese sandwich
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I would say yes, particularly if you’re not building. However, it doesn’t cover the risk of a recession where all prices drop.
That is kind of a silly thing to say (or think). It may matter less (and there are myriad levels of uber-wealthy).
DB2
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Which is exactly what I was referencing. What a silly reply
For the same reason VW wants to charge Audi prices, Audi wants to charge Bentley prices, and Ford wants to charge Porsche prices: the margin between cost to build, and sell price, increases, and you pocket more loot for every percentage point of sale price increase.
Everyone wants to go “upscale” these days, because they can make more loot, while doing less.
Steve
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Too many variables. If it is income producing property, then not really. Rentals still need durable goods, farmland still suffers from market barriers including tariffs.
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You can only do that if you have a superior product. BMW used to be in that category in the 1990’s. [3series, 5 series, 7 series] Ein wurst, drei grosse. Well to do yuppies bought them like hotcakes to differentiate themselves from the unenlightened, uneducated, and the unwashed. I’m not so sure that is the case now.
Regarding lux housing, it still almost always comes down to location location location, and carefully studying how locations go hot or not; e.g. Aspen. The effect can work quite well for merely tropospheric as opposed to stratospheric properties as well, and the “granular risk” is lower.
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The reality is that the whole economy is a pyramid (scheme). As long as there are lots of people with lots and lots of money, the prices go up. (Certain categories exempt: chips, flat-screen TVs, etc.)
But for real estate (and crazy priced autos, yachts, and so on) if the economy gets a serious cold, the prices collapse, because there’s no “intrinsic value” to speak of. OK, a mansion is still worth more than a hovel, but the price compression that happened during the Great Depression (for example) was a mirror image of the price expansion of the Roaring 20’s. Likewise today.
(We’ve seen it in certain locales as when there’s an oil boom - and then bust - in places like Houston and Denver over the past few decades.)
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Part of the USA’s current problem is** the much higher number of people who are so wealthy as to be insensitive to the economy collapsing. They Do Not Care like mere multi-millionaires like me, nor even the mere “tens of millions”-aires do.
Their politics, from local school boards up through Senators, reflect their desire to maintain potent buffers from the commonweal while having housing in walking distance of Aspen’s “Ajax lift” or Oahu’s North coast. In my young days I actually rented housing at low costs in both places where nowadays riff raff like me are watched constantly by security guards.
**”seems to me” but I think my assertion has a very strong basis judging from prices in Aspen (it is an itzy bitsy place), Malibu and choice Hawaiian coasts I know fairly well and watched during the last couple of big economic disruptions.
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True. And not only do they not care, but they appear to be hastening it along for some reason, the most obvious is to scoop up ownership of everything, including our government.
It’s different this time, for sure. They have a plan, 2025, with a far reaching international scope, probably aided by foreign interests. Yes, very different this time.
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Land ie real estate has always been an excellent investment. There is only so much land. Supply is limited and not increasing. Demand continues to increase as population grows.
Buy land and hold long term. You pay property taxes. If your land earns enough to cover expenses it can be an excellent investment.
Farm land is perhaps best choice. Value rises and falls with grain prices. Best to buy when grain prices are down. Tariffs seem to be reducing grain prices. Now could be an excellent time to buy.
Ranch land can work. Tied to beef prices? Head count in down. Some think prices are likely to rise.
Mineral lands can be attractive but depends on the mineral. Copper or gold sounds attractive at the moment. Coal is risky but could be ok. Oil and gas probably ok. Lithium? Rare earths? Do your research.
Developed real estate is a whole different item. Pro assistance probably required. Be sure to buy low!!
I know of two farmland REITs. Not sure what I think of these charts.
Both pay a dividend (FPI: 2.25% , LAND: 5.75%)
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