Rising incomes and rising stock markets created more buyers of luxury goods. However, the agency’s first mid-year report revealed that supplies were lagging.
The demand for affordability extends to the luxury goods market, according to the agency’s first red paper interim report. The report delves into six key trends, from Gen X and Millennial wealth transfers to the impact of artificial intelligence, contextualizing proprietary and third-party sales data with insights from The Agency’s global agency network.
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Mauricio Umansky |Agent
“We are seeing the most significant changes in buyer behavior and market dynamics in recent memory,” Mauricio Umansky, the agency’s CEO and founder, said in a prepared statement. “This report allows our clients and agents to examine in real-time exactly how the market is doing and, more importantly, where it is heading.”
The report found that the percentage of homebuyers with upper-middle class incomes has increased by 210 percent since 1979, going from 10 percent to 31 percent of the U.S. adult population. This coincided with a 142 percent increase in home equity since 2020 and three years of record gains in the stock market, increasing the number of homebuyers able to purchase entry-level luxury homes priced between $1 million and $5 million.
However, inventory levels have not matched demand, creating a highly competitive situation in major luxury markets, including Anchorage, Alaska. Bend, Oregon. Dallas; Marblehead, Massachusetts; and Hilton Head, South Carolina.
As of April, there were only 150 homes for sale in Anchorage, and the starting price for luxury existing homes had risen from $750,000 to $1 million. Home builders are trying to fill that gap. However, new builds are exponentially more expensive, starting at $2-3 million. In Bend, homebuyers are vying for homes in the $2 million to $2.5 million range, and at the current pace of sales there is a two-month supply. There is more availability in the $1 million to $2 million range, but homebuyers seem willing to pay a premium for the square footage and privacy that the higher price ranges offer, especially as remote workers continue to flock to the area. Demand for luxury goods is booming in Dallas, and locals and outsiders from California, New York, and Washington, D.C. all want to live in the city’s premier neighborhoods. But strong home price growth and demand has driven up prices in Highland Park and University Park, meaning entry-level luxury buyers have to travel to the city’s suburbs to find properties listed for $1 million. Investors, second-home buyers and retirees are putting pressure on Hilton Head, and these groups are snapping up the few properties in the $1 million to $3 million range. Inventory growth appears to be off the table as home sellers are reluctant to let go of historically low mortgage rates and re-enter the market at higher price points with higher mortgage rates and six-figure private club membership fees, the report said. There are only nine properties in Boston’s Marblehead area priced between $1 million and $3 million, as homeowners remain reeling from the “lock-in effect” on mortgages. Changes in the market mean that buyers in that price range can no longer afford a “big house,” but in New Hampshire, Vermont, and Maine, the proximity to outdoor amenities makes giving up the space worth it.
Some U.S. homebuyers are turning to foreign regions to boost their profits, with the report highlighting Canada and Spain as hotspots for starters.
“Inventory in Canada is the opposite of the U.S., with more luxury homes available now than in 2019,” Steve Bailey, the agency’s managing partner, said of the firm’s Waterloo, Brantford, Oakville, Muskoka, Toronto West, York, Niagara and Halifax regions. “In Canada, mortgage terms are five years, so even if you have a 25-year loan, you have to renew it every five years.”
“We are now seeing a more balanced market, with at least six months’ worth of inventory in the C$1 million to C$3 million (US$731,000 to US$2.2 million) price range,” he added.
Meanwhile, in Spain, Madrid offers discounts of 40 to 60 percent over comparable properties in other European hub cities such as London and Paris. But with surging demand driving up prices, U.S. homebuyers interested in Madrid will need to take action sooner rather than later.
“Our standard for luxury goods used to be 800,000 euros to 1 million euros (approximately $935,000 to $1.17 million), but now the price of luxury goods is 3 million euros (approximately $3.5 million),” said Patricio Guzman, managing partner at Agency Madrid. “In recent years, there has been a huge influx of investors from Venezuela, Mexico and Colombia, and prices have risen rapidly.”
Agency President Rainey Hake Austin said the report reflects the speed of change in the market since January and the need to proactively adapt to those changes.
“The agency has built a reputation for staying ahead of the market, and this interim report is a direct extension of that work,” she said. “This gives agents the intelligence they need to confidently guide their clients through the remainder of 2026 and beyond.”
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