High-net-worths find safe harbor in real estate

The conclusion comes from Sotheby’s International Realty’s 2025 Mid-Year Luxury Outlook, released on Wednesday, which pulled intel from Sotheby’s International Realty agents across the globe who specialize in transactions priced at US$10 million and above. Those insights are also paired in the report with data from investment bank UBS, J.P. Morgan, Moody’s, McKinsey and Company, Bain and Company, Cotality, the National Association of Realtors (NAR), and the National Association of Home Builders (NAHB).

“The luxury real estate landscape continues to evolve at an unprecedented pace, creating opportunities for homebuyers and sellers with the right market knowledge,” Sotheby’s International Realty Chief Marketing Officer Bradley Nelson said in a statement.

“Our global network of affiliated agents brings unparalleled expertise and market insights that only Sotheby’s International Realty can deliver. This report is designed to empower both homebuyers and sellers with the strategic intelligence needed to make informed real estate decisions throughout the remainder of the year.”

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Luxury real estate continued to outperform the market at large during 2024 and the first months of 2025, Sotheby’s Realty noted, with the top half of the wealthiest U.S. households benefiting from the greatest gains in real estate value, according to data from Realtor.com. 

As some buyers pull away from the market during economic uncertainty, it also creates opportunity for other buyers who are ready to pounce when there’s less competition, the report said. The economic landscape, as well as movement in key markets, rebuilding opportunities in disaster areas and more, will all have an impact on the luxury real estate market this year, Sotheby’s International Realty concluded. But a steady course is predicted as 2025 continues.

“Ultra-high-net-worth individuals continue to view real estate as an essential portfolio component,” Sotheby’s International Realty President and CEO Philip White said in a statement. “Even amid economic uncertainty, the resilience of the luxury housing market provides compelling opportunities for strategic homebuyers and sellers, and this report serves as a roadmap for navigating today’s complex luxury real estate landscape.”

Economic headwinds

“On one hand, sharp swings in equities can prompt some high-net-worth individuals to delay big purchases due to uncertainty,” Odeta Kushi, deputy chief economist of First American Financial Corp, said in Sotheby’s International Realty’s report. “On the other, real estate — especially in prime markets — might be seen as a safer, more tangible store of value.”

• Construction costs may be exacerbated by Trump administration tariffs, Kushi said, which could drive luxury homebuyers toward turnkey properties to avoid elevated construction costs.
• Real estate represents 18.7 percent of the top 10 percent of wealthiest households’ investment portfolios, according to an April 2025 Realtor.com report, which is down from 19.9 percent a year ago.
• The segment of $1 million homes in the U.S. continues to grow, and represents nearly 13 percent of recent existing-home sales, according to April 2025 data from NAR, suggesting affluent buyers see real estate as a safe harbor for their investments.
• A weaker dollar in response to trade wars could lead to more overseas real estate investor purchases in the U.S., as could President Trump’s proposed “Gold Card” visa program, which creates a path to citizenship for individuals who invest US$5 million in the country.

• Key US markets

  “Our luxury property market isn’t impacted by interest rates because 85 percent of transactions are with cash,” said Kara Warrin, an advisor with Golden Gate Sotheby’s International Realty in Marin County and San Francisco. “Our team sold more than US$65 million between October and December 2024, with an average sale price of US$6 million. The buyers tend to be local people who want something bigger and better and have the cash to pay for it.”

  • Buyer confidence seems to be growing in San Francisco, driving momentum at Sotheby’s International Realty – San Francisco, where the firm closed several transactions over $20 million in 2024, breaking old records.
  • Momentum picked up in the New York City luxury market after the election as a result of pent-up demand and more liquidity from stock market performance, local Sotheby’s Realty advisors say. Condos are especially in demand because of their fewer restrictions than co-ops.
  • Low inventory and restrictions on new development in Aspen have led to sustained elevated prices in the luxury ski town.

  Rebuilding after disaster

  “The number of such damaging natural disasters is growing,” Sotheby’s International Realty’s report said. “According to data released in January 2025 by the National Centers for Environmental Information, part of the National Oceanic and Atmospheric Administration, in 2024, the U.S. alone suffered 27 natural disasters where the estimated damage exceeded US$1 billion.

  This trend is having profound consequences for high-end property markets around the world, reinforcing the increasing importance of considering climate resilience when investing in luxury real estate.”

  • 2024 was the fifth year straight in which insured global losses from natural disasters exceeded US$100 billion, marking sustained climatic disruption, according to a January 2025 Moody’s report. One-third of losses were attributed to hurricanes making landfall in the U.S.
  • In the last five years, 23 percent of U.S. homeowners saw property damage or loss as a result of severe weather, and 65 percent are prepping homes for future weather events, according to a Bank of America Institute report from May 2025.
  • Rebuilding after a disaster can slow the inventory recovery, potentially bumping up prices while inventory is still constrained, the report noted. Relocation to other areas after a disaster can shift demand and create more pressure on nearby markets.
  • Low inventory in the Pacific Palisades in the wake of fires in January 2025 has led to the average list price for surviving homes to grow to US$9.7 million, significantly higher than historic norms. Many of those who are rebuilding are now incorporating fire-preservation features in homes to prepare for future wildfires.

  Global highlights

  “What’s driving today’s high-end market is the feeling a home delivers as much as its address,” said Tammy Fahmi, senior vice president of global servicing and strategy at Sotheby’s International Realty. “What we’re witnessing in luxury real estate isn’t just a trend — it’s a fundamental redefinition of value. This experiential revolution transcends cultural boundaries, with buyers willing to pay substantial premiums for properties that offer exceptional features that reflect their lifestyles.”

  • With the Saudi Vision 2030 economic development initiative, executives and foreign companies coming into Saudi Arabia are driving luxury developments with high-end amenities. The Red Sea Project, just off Saudi Arabia’s west coast, is also expected to drive tourism to the region after it is unveiled around 2030.
  • Demand for high-end properties in India has surged in the last two years, and the luxury real estate market is expected to reach a value of US$105 billion by 2030.
  • Between 2012 and 2021, the highest-priced transaction in Puerto Rico rose from US$2 million to $30 million. The island has seen growth in the luxury goods market, with revenue from the industry set to reach US$533.44 million in 2025, according to Statista Market Insights.