Despite housing shortages and major price gains throughout the majority of the U.S. housing market, high-end buyers lucked out when mortgage rates initially plummeted in the early months of the pandemic. Now, as rates creep past the 4% threshold, even wealthy buyers are feeling the sting of a market with too little supply to quell rising demand.
According to National Mortgage News, upscale homes are seeing sky high price gains as buyers rush to lock in purchases before mortgage rates rise higher, intensifying already high demand. Outside of popular metros like Boston, high-end inventory fell nearly 40% year-over-year during the fourth quarter of 2021, and in other suburbs favored by wealthy buyers, supply is at its lowest level in at least six years.
Supply is tightening everywhere, even in back-country Greenwich, an area with stone mansions with tennis courts and swimming pools that have a special appeal in the Covid era, said Mark Pruner, an agent at Compass. Real estate also is seen as a good hedge against inflation, he said.
“Before larger houses on larger lots were a tough sale,” Pruner said. “Now, they’re what high-net-worth individuals are looking for, for the social distancing.”
With demand so hot, the supply shortage is building upon itself. Older people who might have considered downsizing are staying put instead, avoiding fighting it out with younger buyers for smaller homes. With mortgage rates rising, homeowners also are less likely to want to move and give up their lower-cost loan.
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