5 Reasons the Luxury Real Estate Market Is Booming | The Fiscal Times

Like the broader real estate market, sales of high-end homes took a beating during the housing bust, but they’ve bounced back even faster since the recovery began.

In September, the value of homes in the top 5 percent increased nearly 10 percent over the previous year, while the broader market saw gains of just over 6 percent. Although experts don’t expect double-digit gains to continue, they still say strong fundamentals will continue to drive strong sales for high-end homes.

Related: 10 Luxury Home Amenities that Are Trending Up

“There is a slowdown, but the top 5 percent of the market is faring much better than the U.S. as a whole,” says Zillow economist Svenjya  Gudell. “But the sales are still very robust.”

Here are 5 reasons luxury home sales are still going strong:

1. The rich are getting richer. The uneven economic recovery has widened the income gap between the wealthiest Americans and poorest. Data published by economists Emmanuel Saez and Thomas Piketty show that the top 1 percent of households by income has captured a staggering 95 percent of income gains between 2009 and 2012, while the bottom 90 percent have seen income fall by 16 percent. High earners also tend to have larger stock portfolios, so they’ve benefited the most from the booming stock market of the last four years. Those lucky enough to have benefited in the downturn are looking for for homes that meet the needs of their lavish lifestyle. Wealthier homebuyers are also less sensitive to rising interest rates, and less likely to let a small increase in rates affect their buying decision.

via 5 Reasons the Luxury Real Estate Market Is Booming | The Fiscal Times.

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