T
he American economy's steady growth has been a driving force behind the surge in real estate value, with household real estate reaching its third-highest level ever recorded at $48.1 trillion. This represents a 7% gain from the previous year, with homeowner equity in real estate nearing record highs at $34.7 trillion.

    Wealth disparities are evident, as gains in real estate value were largest among the top half of the wealth distribution. However, even among the wealthiest households, real estate comprised only 18.7% of total assets, down from 19.9% two years prior. In contrast, corporate equities and mutual fund shares made up a significant 36.3% of the assets of the 10% wealthiest households.

    The high-end market has outperformed the median, with properties valued at $1 million or more experiencing steady growth over the past 21 months. Sales in this segment now account for 7.6% of the market, up from 5% in February 2023.

    Despite a slight decrease in listings priced above $1 million, high-end homes remain in demand. Time on the market has decreased to 75 days, while price reductions have remained relatively stable at 13%. In contrast, properties priced below $1 million saw an increase in time on the market and price reductions.

    Market trends suggest that high-end buyers are more resilient than their lower-priced counterparts. As the stock market continues to fluctuate, investors may seek the stability of tangible assets like real estate. However, climate risks and policy uncertainty could impact future demand.

    The intersection of economic growth, policy decisions, and opportunity costs will shape the trajectory of high-end real estate in 2025. A more favorable regulatory environment, a nimble federal workforce, and tax cuts could boost financial markets and economic growth. Conversely, policy uncertainty and climate risks may drive investors towards tangible assets like real estate.