5 Reasons for Optimism in the Luxury Real Estate Market

Sotheby's International Realty|July 28, 2025

5 Reasons for Optimism in the Luxury Real Estate Market

Read the 2025 Mid-Year Luxury Outlook Report

Despite the geopolitical and economic disruption of early 2025, there is optimism in the luxury real estate sector at this midpoint of the year. This is a key takeaway from the Sotheby’s International Realty brand’s newly published 2025 Mid-Year Luxury Outlook report.

As outlined in the report, luxury home purchases significantly outperformed other residential property sectors in 2024 and early 2025—and the appeal of luxury property as a safe haven for wealth endures.

“High-net-worth buyers remain actively engaged, particularly in the ultra-luxury real estate segment, where unique properties continue to command premium prices,” says Philip White, president and CEO of Sotheby’s International Realty.

The U.S. Federal Reserve’s decision in mid-June to leave the federal funds rate unchanged represents continued uncertainty about the impact of tariffs and inflation on the economy.

But Lawrence Yun, chief economist for the National Association of REALTORS (NAR), anticipates a rate cut in late summer or early fall. “To get interest rates back to normal levels will take six Fed rate cuts. We expect that to boost real estate sales transactions when the cuts begin,” Yun says.

Economic uncertainty can create opportunities, particularly for high-net-worth individuals. A more volatile stock market is also pushing more wealth toward real estate, which feels safer than stocks, according to an April 2025 Realtor.com report on the high-end housing market.

A wealth of insight is available in the 2025 Mid-Year Luxury Outlook report—but here are some positive takeaways for agents and their clients.

1) Luxury Purchases Outperform Other Market Sectors

U.S. property sales in the US$1 million-plus category were the fastest-growing sales segment for 21 consecutive months as of February 2025, according to the Realtor.com high-end housing report.

That trend was matched by U.S. sales volume growth of 9.4% in 2024 for the Sotheby’s International Realty brand, outpacing the 5.2% overall market growth reported by NAR for the same period, based on its Existing Home Sales data.

Between February 1 and May 1, 2025, sales of U.S. properties at US$10 million and above surged compared to the same period in 2024, according to a May 2025 report in The Wall Street Journal—in Florida, sales in that price category were up 50% in Palm Beach and 48% in Miami.

“I was a little worried when the stock market dipped in February,” says Yun, “but since it came back, I expect the luxury real estate market to continue to outperform the rest of the housing market this year and next.”

2) Low Luxury Inventory Pushes Prices Up

While inventory is growing in some areas, an inventory shortage of luxury homes is anticipated to continue to push prices higher, increasing the value of property portfolios. In Aspen, Colorado, for example, the median sale price for a single-family home was US$13.4 million in 2024, compared to US$9.97 million in 2020.

Bidding wars are common for properties from US$2 million to US$10 million and above in New York City. Even in San Francisco, which experienced a downturn in its luxury real estate market in recent years, inventory for prime properties is limited, which keeps prices steady.

3) High-Net-Worth Individuals Remain Confident

Stock market gains in 2024—when the S&P 500 rose 23%—boosted the willingness of affluent people to spend some of their profits on real estate.

In 2025, a volatile stock market dropped in April from its record high in February, then recovered by mid-May, erasing losses and coming within 4.2% of its high point, as reported by AP News in May. That volatility is anticipated to increase demand for solid real estate investments.

The financial strength of wealthy households is also evident. In 2024, the top 10% of U.S. households—those with an income of US$250,000 or more—accounted for approximately 50% of all consumer spending, according to a February 2025 report in The Wall Street Journal.

4) Cross-border Transactions Continue To Thrive

Buyers in search of second homes, safety and a global lifestyle continue to be interested in properties outside their home country. While a stronger dollar in 2024 made U.S. purchases more costly for foreign buyers, the weakening dollar may pull in more investors looking for attractive opportunities. According to a June report by Realtor.com, searches for U.S. property by international buyers increased during the first quarter of 2025.

“I wondered if new immigration policies would have an impact on foreign purchases, but the luxury real estate market seems bulletproof,” says Selma Hepp, chief economist and senior vice-president at Cotality, a data analytics firm. “We’re still seeing plenty of sales, particularly in Miami.”

U.S. buyers continue to purchase homes in markets such as Italy, Portugal, France, Spain and the U.K., as well as in countries offering fiscal tax benefits such as Dubai, Malta and Switzerland.

5) Sector Sees Global Expansion and Record-Breaking Sales

The Sotheby’s International Realty brand also continues to expand its international presence, opening new offices in Anguilla, Australia, London, New Zealand, The Philippines, Poland and Portugal, and growing its network to more than 1,100 offices in 84 countries.

In addition, Sotheby’s International Realty affiliated agents have achieved record sales in 2024 and 2025, including:

Washington, D.C.’s most expensive ever residential sale at US$25 million, by TTR Sotheby’s International Realty.
The sale of Bing Crosby’s estate in Northern California for US$25 million, the highest sale in 2.5 years for the region, by Golden Gate Sotheby’s International Realty.
A record sale on Dubai’s Jumeirah Bay Island of US$90 million, by Dubai Sotheby’s International Realty.
Italy’s most expensive ever residential sale: a seafront villa in Sardinia for US$172.8 million, with both buyer and seller represented by Italy Sotheby’s International Realty.

For more sector insights, download here the Sotheby’s International Realty 2025 Mid-Year Luxury Outlook report.

Read the 2025 Mid-Year Luxury Outlook Report

Beth Dickerson

Boston, MA

Primary phone
(617) 510-8565
Email
[email protected]
Address
277 Dartmouth St. , 2nd Floor,
Boston, MA 02116

About The Author

One of Boston’s most reputable real estate brokers, Beth Dickerson has achieved more than $2 billion in sales and thousands of successful real estate transactions over her nearly thirty-year tenure. Beth has received national acclaim from the real estate industry and represents some of the most prestigious residents and properties across Massachusetts. Her enduring record as a top producer comes from the intuitive gift of sensing her clients’ needs. She has built a business that is referral-based at its core—a testament to her relationship-driven approach and penchant for exceeding expectations. It is this nuanced expertise that Beth leverages to guide many of her clients-turned-friends through some of the greatest milestones of their lives.

Beth was the proprietor of her own real estate company before joining the residential division of R. M. Bradley in 1993, where she was a top producer for more than a decade. In 2003, she founded her own boutique real estate firm, Dickerson Real Estate, before merging with Gibson Sotheby’s International Realty in 2007. Today, Beth attributes her success to her comprehensive marketing and advertising strategies, exclusive contact network, and unparalleled insight into neighborhoods like Back Bay, Beacon Hill, the South End and Waterfront. With an understanding that no two clients are alike, she works with clients in all phases of life—from first-time buyers to luxury developers, seasoned sellers and beyond. Beth offers clients the resources to aggressively market their property locally, nationally and globally, and her attention to detail, drive and enthusiasm are unmatched.

Beth has appeared in prestigious media outlets including The Wall Street Journal, Mansion Global, The Boston Globe, and Boston magazine, and was prominently featured as Greater Boston’s real estate expert on WCVB Chronicle in 2020. She has had the honor of serving as President of the Downtown Council of the Greater Boston Real Estate Board. For over ten years, she has been a Co-Chair and Committee Member for the Massachusetts General Pediatric Hospital for Children’s Storybook Ball. She serves as a Board Member of the Community Music Center of Boston and a member for the Perkins School for the Blind, Emerald Necklace Park Conservancy, Justine Liff Luncheon, Youth Villages and the Boys & Girls Club of Boston, among dozens of other organizations throughout the Boston area.

A long-time resident of Boston’s Back Bay, Beth was an active member of the community as she raised her two children: she served as treasurer of the Clarendon Street Playground and was an avid supporter of the Hill House Community Center.