The Luxury Real Estate Market at Mid-Year 2026: A Market That Doesn't Follow the Headlines

Based on the 2026 Mid-Year Luxury Outlook Report, Sotheby's International Realty

Surprising Strength

While the headlines fixate on economic uncertainty, the world's wealthiest buyers continue to do what they have always done — buy. The resilience of luxury real estate, particularly properties in the US$10 million and US$20 million-plus price range, exceeded expectations in 2025 and is expected to sustain that momentum through 2026. So says Philip A. White, Jr., President and CEO of Sotheby's International Realty.

"Even after turbulent local elections, against a backdrop of high interest rates and proposed tax measures, we are still seeing strong real estate markets in New York, across the United States, and around the world," says White. "Despite the macroeconomic and geopolitical headlines, affluent individuals remain engaged and confident in the luxury housing market. They are acting prudently, but it isn't stopping them. Demand for top-tier properties continues to show that prime real estate holds its place as a reliable asset and a powerful expression of lifestyle and legacy."

"Affluent individuals remain engaged and confident in the luxury housing market. They are acting prudently, but it isn't stopping them." — Philip A. White, Jr., President and CEO, Sotheby's International Realty

Where the Capital Comes From: The Stock Market Effect

Investment in luxury real estate draws on the same optimism about finance and the macroeconomy. "There is a high correlation between the performance of the stock market and the luxury housing market," notes Selma Hepp, Chief Economist at Cotality, a real estate data analytics company. The S&P 500 index, which tracks the largest companies on U.S. stock exchanges, rose by roughly 80% from the start of 2023 through 2025, and many investors anticipate further gains — according to a January 2026 analysis by The Wall Street Journal.

"Significant wealth creation has occurred thanks to the stock market," says Hepp. "The increase in total wealth for the top 10% of Americans over the past five years amounted to about US$40 trillion, compared with just US$3 trillion for the bottom 50% by income." This is borne out by U.S. Federal Reserve data released in January 2026: the net worth of the wealthiest top 1% of Americans rose sharply, reaching US$54 trillion by the third quarter of 2025.

According to Lawrence Yun, Chief Economist and Senior Vice President of Research at the National Association of Realtors (NAR), the majority of stock-market capital belongs to the top 5% of U.S. households, so years of appreciation in equity values have created the means to buy second, third, and fourth homes at the top of the market. Luxury homeowners have also benefited from rising home values: they can sell a property and pay for their next purchase in cash.

Key figures:

• +80% — the rise in the S&P 500 index (2023–2025)
• US$54 trillion — the net worth of the top 1% of Americans by Q3 2025

Taxes and Location

In 2026, the housing market overall expects a gradual improvement in affordability, though this will vary by region and price range, Hepp believes. "Markets where owners and buyers belong to the upper income brackets are faring better than markets with lower incomes," she says.

The expansion of the State and Local Tax (SALT) deduction from US$10,000 to US$40,000 in July 2025 under the One Big Beautiful Bill Act is likely to increase purchases of high-value homes in states with high property-tax rates — such as New Jersey, Connecticut, Massachusetts, and New York. However, the expanded deductions are phased out for taxpayers with an adjusted gross income of US$500,000 or more, so the effect on ultra-luxury markets may be limited.

Rising insurance costs, higher property taxes, and inflation have far less impact on the ultra-luxury segment, Hepp notes; rising labor costs, however, are constraining new construction and slowing the pace of custom-built homes. "The unpredictability of tariffs and immigration issues have made pricing custom homes considerably more difficult," she says.

Luxury Market Indicators

More than half (55%) of real estate professionals affiliated with Sotheby's International Realty worldwide reported an increase in luxury homebuyers in their local markets over the past 12 months — according to the mid-year 2026 survey of Sotheby's International Realty agents. They expect activity to remain just as strong throughout 2026 and reported an average price increase of 5%.

A few standout deals:

• In Connecticut, Leslie McElwreath doubled the number of transactions above US$10 million in 2025 compared with 2019, even though there were fewer than 100 homes on the market in that price range.
• On Sea Island, Georgia, a state record was set: a home by architect John Portman, measuring approximately 1,200 square meters, sold for US$30 million. That record may soon be broken by the Lowe Tide estate, an oceanfront property of about 1,020 square meters recently listed at US$42 million.

In the broader market, Hepp observes a divergence: the Southeast is slowing, while the Midwest and Northeast remain more stable. Florida's market has cooled overall due to the combined effect of natural disasters, rising insurance, and immigration restrictions, but luxury homebuyers appear insulated from these factors. Miami's ultra-luxury market, according to Yun, stands on a particularly solid footing thanks to infrastructure development and the construction of new luxury condominiums.

In Los Angeles, despite the "mansion tax" on sales of properties above US$5 million, in effect since April 2023, the ultra-luxury market continues to thrive: sales of homes in the US$3 to US$5 million range rose 11% in 2025, and homes of US$5 million and above rose 30%.

+55% of real estate professionals reported an increase in buyers.

The Global Wealth Effect

Capital continued to accumulate worldwide in 2025: there were an estimated 4.3 million high-net-worth individuals (HNWIs) with household wealth of more than US$1 million — according to Altrata's World Ultra Wealth Report 2025 (September 2025). This group includes more than 500,000 ultra-high-net-worth individuals (UHNWIs) with assets exceeding US$30 million. And although UHNWIs make up just 1.1% of the world's millionaires, they hold 32% of that group's total net worth.

The top ten countries by share of UHNWIs include the United States, China, Germany, the United Kingdom, Japan, Hong Kong, Canada, France, Italy, and India. Altrata's researchers forecast that by 2030 the largest growth in the number of UHNWIs will occur in Asia, with a particularly sharp rise in India.

According to the UBS Global Wealth Report 2025 (June 2025), 35% of the world's wealth is concentrated in the United States and about 30% in emerging economies. Nearly 40% of the world's millionaires live in the U.S., four times as many as in mainland China; researchers expect another five million new millionaires to emerge by 2029.

The world's wealthy in 2025:

• 4.3 million — HNWIs with wealth of US$1 million or more
• 500,000+ — UHNWIs with wealth of US$30 million or more
• 32% — share of net worth held by the wealthiest 1.1%
• ~40% — share of the world's millionaires living in the U.S.

A Generational Shift: Millennial Buyers

A combination of earned and inherited capital has driven a rise in luxury home purchases by millennials (born between 1981 and 1996). A majority (66%) of survey respondents working across all price segments noted an increase in millennial buyers; in the US$5 million-plus segment the trend is even more pronounced — cited by 73% of professionals.

"Wealth transfer is happening right now and is giving younger buyers more capital for major purchases," says White. "At the federal level, lifetime gifts of up to US$15 million per individual or US$30 million per married couple are tax-exempt (under IRS rules updated in January 2026). On top of that, parents understand that gifting their children US$2 million now is the equivalent of earning US$4 million, because it isn't taxed."

Lifestyle considerations, meanwhile, matter across all generations: 62% of survey respondents cited this as an increasingly significant factor for buyers. Taxes followed at 60%, then economic stability (53%) and political stability (49%).

Travel as an Indicator of the Second-Home Market

Luxury travel trends also offer insight into the motivations of those considering luxury real estate. "Affluent travelers value an experience in which they are fully taken care of," says White. "This is one reason branded residences remain one of the hottest trends. People are drawn to St. Regis, Four Seasons, and Waldorf Astoria residences because they love living where there is luxury hotel service. Asian operators — Mandarin Oriental, The Peninsula, Banyan Tree, Six Senses, and Rosewood — are setting new standards of luxury."

According to The Wall Street Journal (November 2025), affluent travelers who have grown wealthier thanks to the stock-market rally and rising property values are spending on travel without restraint. Multigenerational trips are growing more popular, with grandparents paying for accommodations large enough to house their children and grandchildren.

Regional Highlights

Boston and Cambridge (Massachusetts). The appetite for renovation has vanished over the past year or two — largely due to uncertainty about cost and timelines. A price shift has occurred: most ultra-luxury homes priced below US$10 million had climbed to US$15–16 million by 2025. Now the market appears to have hit a ceiling, and prices are pulling back to US$12–15 million. The cause is a "vibecession" — the perception of an economic slowdown even when there isn't one.

Dallas (Texas). The market is stable. 70% of transactions occur between January and June, and deals typically close within 30 days. Inventory is extremely limited, especially in areas with diverse educational resources, where homes run from US$2.5 to US$6 million. The market is "hyper-obsessed" with location: some buyers want to live only on one or two specific streets.

San Francisco (California). Artificial intelligence has sparked a renaissance in the Bay Area. In 2025, sales of homes priced at US$7.5 million and above rose 84% compared with 2024. People are returning from New York, Austin, Washington, and elsewhere. Buyers want turnkey homes, flexible floor plans, private outdoor space, and a walkable neighborhood.

"Artificial intelligence has sparked a renaissance in the San Francisco Bay Area." — Alex Hachiya, Senior Global Real Estate Advisor, Sotheby's International Realty — San Francisco Brokerage

Mumbai and New Delhi (India). 2025 was a defining year, with record sales in the ultra-luxury segment. Overall values have risen by more than 40% over the past three years. Inventory remains scarce: a shortage of trophy properties in prestigious zones such as Lutyens' Delhi and South Mumbai keeps prices high.

London (United Kingdom). Headlines predicted an exodus of wealthy owners following changes to tax legislation, but in 2025 the market outperformed 2024 in both transaction volume and prices. The demographic is shifting younger — buyers in their 30s and early 40s, often business founders or members of the second generation of wealth.

"The demographic is shifting younger — buyers in their 30s and early 40s, often business founders or members of the second generation of wealth." — Marcus O'Brien, Head of Family Office, United Kingdom Sotheby's International Realty in London

Singapore. Its status as a magnet for UHNWIs and a strong currency reinforce its reputation as a safe-haven market. Prices for non-landed properties (condominiums and apartments) were resilient throughout 2025, and some trophy assets reached new record levels.

Sydney (Australia). The luxury market outperformed other international markets in 2025 — higher prices, more transactions, and relatively limited inventory. The forecast: prices will continue to rise, but at a moderate, sustainable pace, without a boom.

"I expect prices to continue rising, but at a moderate, sustainable pace." — Harriet France, Senior Global Real Estate Advisor, Sydney Sotheby's International Realty

The Aging Millionaire Boom

The world's wealthiest buyers are aging — and building homes around their lifestyle. "Rising longevity, combined with affluent buyers' desire to 'age in place,' is changing everything — from home design and location choice to how real estate circulates in prime markets," says Tammy Fahmi, Senior Vice President of Global Servicing and Strategy at Sotheby's International Realty.

Average global life expectancy at birth has risen significantly over the past century — from about 46 years in 1950 to 73 years in 2023 (according to Statista, November 2025). By 2100, people are expected to live to an average of 82, and around 90 in Europe and North America.

"Many buyers in their late 50s, 60s, and 70s are not downsizing or moving into senior housing," says Anna Sherrill, Senior Global Real Estate Advisor, ONE Sotheby's International Realty in Miami. "Instead, they are buying or keeping homes that allow them to live well for a very long time."

The Longevity Economy

The growing emphasis on longevity is not merely a lifestyle trend but a major economic force. In March 2025, UBS Global Wealth Management forecast that the global longevity market — encompassing spending on health, wellness, and aging — will grow from US$5.3 trillion in 2023 to US$8 trillion by 2030. The world's population over the age of 60 is expected to double by 2050, surpassing two billion people.

Real estate has landed squarely in the path of this spending. "Wellness real estate has consistently remained the fastest-growing sector of the wellness economy, significantly outpacing growth forecasts and economic trends, and has more than doubled in size over five years," note the authors of a Global Wellness Institute report (November 2025). By 2029, the market for such real estate is valued at more than US$1.114 trillion.

"Today's ultra-high-net-worth buyer thinks in decades, not moments," says Nikki Field, Senior Global Real Estate Advisor, Sotheby's International Realty — East Side Manhattan Brokerage. "They invest in residences that protect their time, enhance their wellbeing, and remain relevant for generations."

Growth of the global longevity market: from US$5.3 trillion (2023) to US$8 trillion (projected 2030).

Designing for a Long Life

For buyers planning to "age in place," the traditional hallmarks of luxury — panoramic views or vast entertaining spaces — are now complemented by wellness-oriented design.

"Affluent owners who live longer will prioritize residences that extend independent living: floor plans that prevent falls, circadian lighting, air- and water-quality control systems, and built-in telemedicine," says Fahmi. "Homes with primary-floor suites, elevator shafts, non-slip surfaces, smart monitoring, staff quarters, and wellness zones will command an especially high premium."

Nearly 40% of real estate professionals surveyed in the Sotheby's International Realty mid-year 2026 study say that "aging in place" is becoming an increasingly relevant concern for buyers. Among the most sought-after built-in wellness features:

• Universal-design elements ensuring accessibility as mobility changes, including a preference for single-story residences and step-free bathrooms.
• Direct contact with nature: walking and hiking trails on the grounds, an emphasis on privacy and quiet, and especially water views.
• Optimization of air and water quality, including advanced filtration systems.
• Spa amenities: sauna, hammam, cold plunges, red-light therapy, massage rooms, and fully equipped gyms.
• Integrated technology and staff for health monitoring, mobility assistance, and smart-home management.
• Healthy nutrition: juice bars, access to personal chefs, and an emphasis on organic and plant-based foods.

~40% of professionals in the US$10 million-plus segment cite "aging in place" as a growing concern for buyers.

Wellness Communities and "Blue Zones"

Beyond individual homes, entire communities built around the idea of longevity are gaining popularity. Luxury residential enclaves in Florida, Mexico, and other coastal regions increasingly include on-site medical specialists, wellness programs, and preventive-medicine centers — modeled on hospitality but designed for permanent living.

Studies of regions where longevity is the norm (so-called "blue zones") offer further insight. The term was first coined in 2005 by National Geographic researcher Dan Buettner to describe regions with a heightened concentration of people living to 100. The five original blue zones are Ikaria (Greece), Okinawa (Japan), Sardinia (Italy), Loma Linda (California), and the Nicoya Peninsula (Costa Rica).

These regions share traits increasingly reflected in luxury homebuyers' preferences: walkability, social connectedness, access to nature, a healthy local food system, and community-oriented design.

"Homes are becoming hubs of care, connection, and continuity — where luxury is also defined by adaptability, wellness, and community." — Tammy Fahmi, Senior Vice President of Global Servicing and Strategy, Sotheby's International Realty

The Future for Younger Buyers

The conversation about longevity in luxury real estate is not happening only among older buyers — it begins decades earlier than one might expect. According to the Sotheby's International Realty mid-year 2026 survey, the greatest surge was among millennials: 55% of respondents worldwide noted an increase in buyers from this generation, especially in the US$5 million-plus segment.

"It's striking how many buyers in their 30s and 40s are purchasing properties in the US$7 to US$25 million range," says Anna Sherrill. "Some have inherited capital; others are entrepreneurs in technology, finance, cryptocurrency, or another business they built at a young age."

Unlike older buyers, who may retrofit a home later, younger ones increasingly want a residence that is "future-proofed" from the start. "They expect high-end wellness amenities, strong design, privacy, and turnkey living from day one," says Sherrill. "Compared with older buyers, they are more global, more design-oriented, and less inclined to compromise."

Resilient Cities

More than 4 billion people — 45% of the world's population — now live in cities (according to the UN, November 2025), and that number will continue to grow toward 2050. The wealth that cities generate is growing too: just 1,000 cities produce nearly 60% of global GDP (according to the Oxford Economics Global Cities Index 2025, May 2025).

Kearney's Global Cities Resilience Index (October 2025) highlights what distinguishes the real estate markets that recover and appreciate in value: effective institutional governance, sound finances and a strong business environment, technological innovation, social capital, and integration into global networks.

The power of cities:

• ~60% of global GDP is produced by the 1,000 largest cities
• 45% of the world's population lives in cities today

New York

"Betting against New York is always a bad idea," says Wendy Arriz, Senior Global Real Estate Advisor, Sotheby's International Realty — East Side Manhattan Brokerage. "It has a unique spirit that cannot be matched."

Over the past 25 years, the city has weathered a terrorist attack, the global financial crisis, and a pandemic. Even so, New York is growing: sales in the first quarter of 2026 rose 4% year over year, totaling US$6.2 billion. At the same time, Arriz says, the city is undervalued: prices stayed flat for a long stretch while the rest of the country posted significant gains. The median price of a Manhattan residence was US$1.15 million in 2016, and nearly a decade later, in 2025, US$1.28 million.

Headlines about a proposed tax on New York second homes valued at US$5 million and above put the luxury market on alert, but there are no signs of a slowdown — especially with Wall Street performing so strongly.

"Betting against New York is always a bad idea." — Wendy Arriz, Senior Global Real Estate Advisor, Sotheby's International Realty — East Side Manhattan Brokerage

Los Angeles

Natural beauty and warm weather are the two biggest draws, says Ernie Carswell, Senior Global Real Estate Advisor, Sotheby's International Realty — Beverly Hills Brokerage. Despite the departure of some wealthy individuals to states with no income tax (Texas, Florida), home prices remain markedly above 2019 levels, even as the market has cooled since 2024.

Two shocks have affected the market: the introduction of the "mansion tax" (4% on properties above US$5.3 million and 5.5% on properties above US$10.6 million), in effect since April 2023, and the devastating fires of January 2025, which destroyed roughly 17,000 homes in the Altadena and Pacific Palisades areas. Recovery is moving faster in the more affluent Pacific Palisades. Insurance costs in vulnerable zones have risen: a homeowner in Brentwood may now pay up to US$120,000 a year, against roughly US$20,000 a decade ago. Even so, prices in Brentwood rose more than 50% in a year.

"There's a spirit of absolute freedom in Los Angeles that no one wants to give up. That's exactly why the city keeps recovering." — Ernie Carswell, Senior Global Real Estate Advisor, Sotheby's International Realty — Beverly Hills Brokerage

Milan

Milan's transformation into a global city has accelerated over the past two decades. The abandoned rail yards of Porta Nuova have become a business district for finance, fashion, and media. The city drew attention first with Expo 2015 and, more recently, by hosting the 2026 Winter Games.

Italy's flat tax, which caps the tax on foreign income for homeowners at €300,000 (US$351,000) per year, has attracted a new category of buyer. "The key difference is that many are now buying a primary residence," says Diletta Giorgiolo, Real Estate Advisor, Italy Sotheby's International Realty. The flat tax is especially attractive to families from the United Kingdom following the end of the non-domiciled regime there.

Residential real estate in Milan is rising steadily — by about 3–4% (with some properties appreciating as much as 7%). At the same time, the city remains relatively affordable compared with other major capitals. Inventory is extremely limited, especially turnkey properties. Prices for the most coveted estates can reach €30 million (US$35 million).

Hong Kong

After years of oversupply, Hong Kong is recovering, says Teresa Chan, Director of Business Development, List Sotheby's International Realty, Hong Kong. Total transactions in 2025 reached about 62,000 properties — 17% more than in 2024. Home prices rose 3.3% in 2025 — the first increase since 2021.

Global uncertainty has reinforced Hong Kong's position as a relative safe haven for some UHNWIs. Mainland Chinese residents account for up to 30% of buyers. For 2026, prices are forecast to rise 3–5%, with luxury residences potentially gaining up to 5%. In early 2024, Hong Kong abolished all additional taxes for homebuyers.

"The city's commitment to an independent common-law legal system provides a reliable foundation for investment, while a simple and competitive tax regime supports capital preservation." — Teresa Chan, Director of Business Development, List Sotheby's International Realty, Hong Kong

The Pull of Cities

City's are the world's economic engines, and there are always buyers who want a share of them. Urban areas retain their appeal by offering access to art, culture, and people, refined housing options, and strong infrastructure. For many, it is precisely this combination of energy and opportunity that keeps them within the city.

Lifestyle Drives Sales

"Our brokerages and affiliate business have tremendous momentum," says White. "We expect the resilience of the luxury real estate market to continue throughout this year and beyond."

The combination of wealth creation through real estate, equity investment, and the intergenerational transfer of capital underpins the resilience of the luxury and ultra-luxury housing markets. Ultra-high-net-worth buyers and sellers share an understanding that investing in real estate for lifestyle benefits and financial diversification can help achieve their desired outcomes. In doing so, they turn for advice to real estate experts with global networks and experience.

Sources cited in the original report: The Wall Street Journal, the U.S. Federal Reserve, Altrata (World Ultra Wealth Report 2025), UBS (Global Wealth Report 2025), Statista, the Global Wellness Institute, National Geographic, Oxford Economics, Kearney, the United Nations, Henley & Partners, Reuters, AP News, and the mid-year 2026 survey of Sotheby's International Realty agents.