Market Insights | Compass 2023 Mid-Year Ultra-Luxury Report

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It's fascinating to see the insights from Compass's Ultra-Luxury Report for the first half of 2023. The report highlights several trends and market dynamics in the ultra-luxury real estate sector in the United States. Here are some key takeaways from the report:

  1. Vacation/Second-Home and Low-Tax Markets: Unique properties in vacation and second-home markets, as well as areas with favorable tax environments, are experiencing higher sales rates compared to the previous year. This suggests that affluent buyers are attracted to properties in these locations, despite challenges such as limited inventory and higher interest rates.

  2. Resilience in Historically Wealthy Coastal Enclaves: Despite the appeal of vacation and low-tax markets, historically wealthy coastal areas like Greater Los Angeles and Manhattan continue to be popular among affluent buyers. This suggests that the prestige and allure of these locations remain strong, even in the face of external factors.

  3. Total Transactions and Sales Volume: The ultra-luxury real estate market saw a total of $13.85 billion in transactions across 806 deals during the first two quarters of 2023. This underscores the resilience of the sector and the willingness of ultra-high-net-worth buyers to engage in transactions despite external challenges.

  4. Emerging Markets: The report highlights the emergence of new markets in the ultra-luxury segment. For example, New Hampshire experienced a notable increase in ultra-luxury sales, with three deals occurring in the first three months of 2023. Similarly, Fairfield County in Connecticut saw a significant uptick in transactions compared to the same period in the previous year.

  5. Shift towards Low-Tax and Vacation Destinations: High-net-worth buyers are increasingly gravitating towards locations with low-tax and vacation benefits. Cities like Dallas-Fort Worth and Houston saw a 200 percent increase in transaction totals year-over-year. Jackson Hole also experienced a resurgence, with 60 percent more ultra-luxury sales in the first half of the year compared to the same period last year.

  6. Phoenix Area's Appeal: The Phoenix area is becoming a booming market for ultra-luxury real estate, particularly for self-made "boomer" buyers. The region's tax-friendly environment, with income tax under three percent, is a significant draw. Sales of properties priced at $10 million and above in the Phoenix area increased by 18.7 percent year-over-year.

Overall, Compass's 2023 Mid-Year Ultra-Luxury Report paints a picture of a dynamic and resilient ultra-luxury real estate market in the U.S. Despite challenges, affluent buyers are actively engaging in transactions, and the market is witnessing shifts in preferences towards certain types of locations and markets. These insights provide valuable information for both real estate professionals and investors interested in the ultra-luxury segment.

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