High End Real Estate & Stocks

CoreLogic recently analyzed the correlation between the stock market and sales of $1 Million+ properties.

 “The powerful ‘wealth effects’ generated by the rapid rise in equities between 2009 and 2015 drove a large rise in the sales of homes that sold for $1 million or more.

Historically, sales of homes priced $1 million or more averaged 1.2 percent of all home sales. The spread between high-end sales and equities widened during the housing bubble but then moved more closely in unison. By the time the equity markets had peaked in May 2015, the $1 million or more share of the market had nearly doubled, averaging 2.2 percent for the remainder of the year.”

This seems logical. As a person’s wealth increases, they feel more confident in their purchasing power. And that translates to real estate. When the stock market dipped earlier this year, there was evidence the upper-end real estate market was beginning to soften.

With a strong stock market, the luxury real estate market may strengthen as we move through the rest of the year.

The strength of the stock market is a key factor in the strength of the luxury real estate market. If the stock market falters, look for high-end sales to slow. If the market advances, high-end home sales will be strong.