Rich People Aren’t Buying Mansions at The Moment & Experts Are Saying This Might Be a Sign of a Much Bigger Problem
People often read about their favorite celebrities’ latest real estate buy and sells. But there seems to be a recent stark decline in the purchasing activity of the other members of the monied class, and financial experts fear it might be a prelude to something more concerning.
A Red Flag
According to a report by CNBC‘s award-winning journalist Robert Frank, there is currently a surplus of high-end real estate across the United States because the rich aren’t buying properties as much as they used to. This is considered to be a red flag as this stagnant state of luxury real estate has only been seen since the last financial crisis which took place a decade ago.
This decline in spending by the rich can also be seen in other areas from high-priced art, cars, and even luxury retail. If these high-income consumers continue to scale back on their spending, economist Mark Zandi says that this could threaten the expansion of the economy.
What more, due to the rising number of unpurchased properties in areas like New York City, the value of these eventually gets cut and their prices drastically go lower.
A Nationwide Phenomenon
This phenomenon has been observed in many other metropolitan areas other than New York City. For example, Miami luxury condos have reportedly been staying on the market for about four to six years until they’re sold again. Even million-dollar ranches out west are experiencing the same price cuts and languishing unsold for years. The Wall Street Journal’s Katherine Clarke attributes this to the decreased allure that ranches have upon the millennial market who find those kinds of properties to be too costly and labor-intensive.
The case is also the same in California. Business Insider’s Katie Warren uses the case of a California mountain estate which was put up for sale by a lottery winner the year prior. The massive 16,000 square feet property which has its own buffalo ranch was originally put up for sale for $26 million. By August of this year, it has been reduced down to only $6.9 million.
The Last Recession
It can be remembered that the United States last faced a financial recession in the late 2000s which began with the bursting of the housing market bubble leading to the decreasing of the value of mortgage-backed securities. The last recession lasted from late 2007 to mid-2009. It continued on to affect the rest of the world when the 2009 global recession came after.
The effects of this previous economic decline can still be felt today and have reportedly left millennials more vulnerable compared to older generations.
More in Finance & Business
Following Your Parents’ Financial Advice Isn’t Always a Great Idea–Here’s Why
Parents only want the best for their children. But, although they may mean well, a lot of the financial advice that...September 25, 2019
Listen Up Architecture Enthusiasts! This Incredibly Unique Home Designed By the Famed Frank Lloyd Wright is Up for Grabs
Proof of architect and interior designer Frank Lloyd Wright‘s enduring influence in the world of architecture is that his designs remain...September 23, 2019
Retiring Early Has an Unexpected Downside That Most People Forget to Plan For
Being able to retire early may sound like a fantastic scenario. But the experience of numerous retirees today may change this...September 19, 2019
This is How You Can Effectively Increase Your Credit Score & The Amount of Time It’ll Take You to Actually See The Changes
One’s credit score or credit rating is a great measure of how well a person’s finances are currently doing. For example,...September 19, 2019
Weight Loss Guru Jenny Craig Finally Sheds Beachfront Mansion For This Reduced Yet Still Very Profitable Price Tag
For more than three decades now, entrepreneur Jenny Craig has been helping people shed the extra pounds through her eponymous nutrition...September 18, 2019
This Is The Important Retirement Question That Most Retirees Always Ask Themselves Too Late
For a majority of the working population, the first question they ask themselves in relation to retirement is when they would...September 17, 2019
Kanye West Just Expanded His Real Estate Holdings With The Surprising Purchase Of This Wyoming Property
Knowing controversial rapper and businessman Kanye West and his music, one wouldn’t immediately relate him to the tranquility and simplicity of...September 16, 2019
The House Where Actress-Director Greta Gerwig Shot Her ‘Little Women’ Remake Is Up For Grabs–Here’s an Inside Look at The Historic Property
Everyone seems to be excited about actress-turned-director Greta Gerwig’s second feature film after the success of her directorial debut ‘Ladybird’. Her...September 13, 2019
These Are the Five Most Common Mistakes Beginner Investors Unwittingly Make & What You Can Do to Avoid Them
It’s a positive thing that more and more people today are seeing the benefits of investing and are starting the habit...September 12, 2019