WSJ: Rich Folk Backing Away from RE Market

WSJ headline: Even Deep-Pocketed Buyers Are Starting to Back Away From the U.S. Housing Market

Subheadline: Economic uncertainty fueled by rising interest rates, volatile stocks and frothy prices is leading to a luxury slowdown, with a housing bubble in Austin near bursting

By E.B. Solomont
June 10, 2022 7:00 am ET…

In May, contracts on Manhattan condos priced between $10 million and $19.99 million were down 41.2% compared with contracts in May 2021, while inventory jumped 42.9%, according to Miller Samuel data. In the Hamptons, contracts on single-family homes in that price range in May dropped 83.3% year-over-year while listings were up 20% compared with the year prior.

“It’s a hard fall from grace,” said Cody Vichinsky, president and co-founder of Bespoke Real Estate, who said that in the Hamptons’ previously frothy market, some C-quality properties hit the market with A-quality prices. But at a certain point, buyers won’t pay double the prior sale price in a short period of time, Mr. Vichinsky said. He cited a newly built house in Watermill, listed in the $30 million range, that has been on the market for a year. He said the seller turned down his client’s offer of $28 million. “I bet he’s kicking himself now for not taking it,” Mr. Vichinsky said. “He was hypnotized by what the headlines were saying.”

According to the Redfin data, sales prices for the top 5% of the market nationwide aren’t dropping, although the meteoric growth of the past couple of years is slowing. The median luxury sale price rose 19.8% for the period Feb. 1 to April 30, compared with the same period in 2021. The median price grew 27.5% during Feb. 1 to April 30, 2021, compared with the same three months in 2020. Mr. Bokhari said he expects the numbers to slow further.