(Miami)

Luxury real estate is an interesting corner of the housing market for a number of reasons. It is not subject to the same sort of macro trends that affect the rest of the real estate market, such as mortgage rates directly influencing pricing and demand. Therefore, it is often overlooked as a barometer of the sector. However, if you pay attention, luxury real estate actually works as a solid leading indicator of the broader real estate market. While it is insulated, it is not immune from the same forces as its mass market brethren, and rates, stock prices, foreign buying and beyond all affect it. For instance, the chief economist at Redfin comments that “When people have more wealth because of stock gains, they have more money to spend on luxury homes … But if some luxury buyers think the stock market isn’t going to do as well, there may be an increase in investment in real estate because it’s seen as a safer place to put money”.

FINSUM: The problem with correlating the stock market and luxury housing is that both stocks rising and falling can boost luxury real estate, as rising shares mean more wealth to splash out on homes, while a weaker market can boost the sector because of safe haven characteristics.