The Ultra Wealthy Are Riding Out the Market Chaos in Luxury Real Estate
A year ago, entrepreneur Dan Herbatschek was just another New Yorker hunting for a larger apartment for his family. But since March, he has signed contracts to buy four Manhattan condos despite the economic turmoil spurred by global tariffs. Now Herbatschek is part of another group: affluent buyers investing in ultraluxury real estate amid the uncertainty.
'The chance of taking a hit in the stock market is a bit too high for the reward, especially when we consider inflation,' said Herbatschek, an applied mathematician and tech-company founder. 'Real estate is safer, less volatile.'
In early May, he signed a $12.25 million contract on a five-bedroom Upper East Side condo for himself, his wife and three children. He is also buying three investment properties priced between $2 million and roughly $5.5 million. 'We've deployed more than $20 million so far,' said Wendy Chang Lee of Douglas Elliman, Herbatschek's real-estate agent.
Herbatschek's thinking is far from unusual. Despite a chill in the overall housing market, ultraluxury home sales in areas like New York, South Florida and Los Angeles are accelerating as the wealthy buyers bet on real estate's long-term value. Since February, the number of homes sold for $10 million or more has surged in major markets nationwide, according to an exclusive analysis by The Wall Street Journal. Between Feb. 1 and May 1, sales at that price point in Palm Beach, Fla., surged 50% from the same period last year, while sales in Miami-Dade County jumped 48.5% year-over-year, according to public records and local multiple listing service data. In the luxury ski destination of Aspen, Colo., sales jumped 43.75% in that same period, followed by Los Angeles County at 29% and Manhattan at 21%.
Palm Beach real-estate agent Dana Koch of the Corcoran Group, who has brokered two roughly $50 million deals in the last month, said buyers are turning to real estate because it's a tangible asset. 'It's just a safe place to put your money to ride out this wave and see what transpires,' he said.
When President Trump's tariffs were first announced, some wealthy buyers tapped the brakes and backed out of deals. In recent weeks, however, real-estate observers have been surprised to see a wave of big-ticket sales across the country.
The largest was the $225 million sale of a residential compound in Naples, Fla., in late April, the country's second-most expensive home sale ever recorded. The seller was tied to the DeGroote family of Canada, property records show. The same week, billionaire David Hoffmann paid $85 million for a waterfront property nearby.
In Los Angeles, Australian billionaire James Packer paid $110 million for a lavish mansion, while in the San Francisco Bay Area, an Atherton mansion sold in April for $51.5 million, one of the highest prices ever recorded in the area. In New York, British property developer Christian Candy and his wife, Emily Crompton-Candy, paid $46.9 million for a four-bedroom triplex at 111 West 57th Street, one of Midtown's new supertall condominiums. And hotelier Vladislav Doronin sold his home on Miami Beach's Star Island for $125 million in March.
'For my clients, it's business as usual,' said Coldwell Banker Realty agent Jade Mills, who is in the midst of negotiating a deal for more than $30 million in Beverly Hills, Calif. 'If anything, we're seeing people taking money out of the stock market at a loss and buying real estate.'
Palm Beach has seen a number of megadeals, including investor Andrew Farkas's $51.42 million sale to Bren Simon, the widow of Simon Property Group founder Mel Simon. Billionaire Red Ventures co-founder Ric Elias sold his waterfront mansion to real-estate investor Mark Paley for $73 million in March. That same month, billionaire manufacturing executive David MacNeil inked a contract to pay $55.5 million for property adjacent to a site he already owns in the nearby town of Manalapan. He has plans to raze a partially completed home on the site to make way for a new estate.
MacNeil would actually have been willing to pay up to $75 million for the site, he said in an email. 'The sellers obviously left the casino way too early. Lucky for me!' he quipped.
The deal will bring his total spend in Manalapan to roughly $94 million over the past year. 'There's really no bad time to buy great properties,' he said. 'No one ever regretted buying the very best, whether it is a premium collector car or a piece of premium real estate. Scared money chases bargains, and smart money chases excellence.'
Florida-based entrepreneur Todd Green closed May 8 on a slopeside vacation home in Vail, Colo., for $17.8 million after going into contract in April. The five-bedroom penthouse is substantially larger than one he already owned in the area. Green, who owns a string of car dealerships in Illinois and various other businesses, said he has a substantial amount of money in equities, but isn't worried about temporary swings in the market.
'It's like Warren Buffett always said: If you're thinking about the stock market over a period of a day or a week, you shouldn't be in it,' Green said. 'I don't plan on ever selling my stocks, so this is a little blip on the radar.'
A hit to the stock market doesn't take the same toll on a '$100 million guy' as it does on the merely wealthy, noted Chadd Ziegler of Christiania Realty in Vail, who represented Green in his purchase. 'That person doesn't need to sell their third home to buy Cheerios for breakfast the next morning.'
Home buyers at lower price points, by contrast, are holding off on buying and selling amid the chaos, agents said. For Miami homes below $20 million, for example, listing prices have dropped 10% to 20% since the start of the trade war, said agent Danny Hertzberg of Coldwell Banker.
'The most bullish buyers seem to be the highest-net worth buyers,' said Hertzberg, who knows of at least three Miami homes in contract to sell for $40 million or more. 'The rest of the market is soft—frozen in some aspects—whereas the top of the market is accelerating in the number of sales and prices.'
Many of Hertzberg's high-net-worth clients want to buy now because they think construction will become more expensive as the effect of the tariffs becomes clear, Hertzberg added.
Hoffmann, an activist investor, already owned a smaller home in Naples but was searching for a larger compound in the area for five years. 'This wasn't a spur of the moment thing,' he said. The $85 million house, which measures about 17,200 square feet with eight bedrooms, ticked all the boxes in terms of design, size, quality and location. He is also in contract to buy the adjacent property with a guesthouse, bringing the total purchase price to just over $100 million. The two properties had been listed for a combined $125 million.
Hoffmann said he has diverse investments, including a 'significant' amount of money in the stock market, but isn't worried about short-term fluctuations. Moreover, he felt he got a good deal on the Naples home, since it would cost about $110 million to build today.
'It sounds crazy to spend $85 million for a house and say it's a great value, but it was,' Hoffmann said.
For his part, MacNeil said he wasn't spooked by the tariffs or the stock market turmoil, in part because he is a supporter of Trump's trade policies.
'The President's tariffs are absolutely a good thing,' MacNeil said. 'People have to be patient with his plan and allow him to work his magic and soon the economy will be on fire.' He added a flame emoji.
Write to E.B. Solomont at eb.solomont@wsj.com and Katherine Clarke at Katherine.Clarke@wsj.com
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CNN
an hour ago
- CNN
Wall Street is making some seriously weird trades
Wall Street traders hunting for profits might find that the most lucrative investments are in the peculiar market for precious metals. Gold, silver and platinum prices have surged this year as investors have piled into precious metals in search of places to hide from trade war uncertainty. President Donald Trump's chaotic tariff plan has rocked markets, and investors have tried to minimize risk by putting some money in safe haven assets. While gold is historically considered a haven, demand for havens has spilled over into its wonky cousins like silver and platinum. The metals craze is reflected in the numbers: Precious metals are trouncing the US stock market this year. Gold has soared 27.5%, silver is up 24% and platinum has surged a whopping 36%. Meanwhile, after rising by 23% last year and 24% in 2023, the S&P 500 is up less than 3% so far this year; there is an unusual amount of jitters in the normally staid bond market; and the US dollar has broadly weakened after rising 7% last year. As bonds have been volatile and the dollar has weakened amid tariff turmoil, weird investments like silver and platinum have emerged as a way to hedge against the tremendous uncertainty. 'These dynamics have further incentivized investors to diversify away from traditional financial instruments and toward tangible assets,' Ole Hansen, head of commodity strategy at Saxo Bank, said in a Friday note. 'Gold continues to be the primary haven,' Hansen added, 'but with bullion demand showing signs of stalling as investors look for a fresh trigger to propel prices higher, we have instead in recent weeks seen heightened interest in silver (and) platinum.' Silver and platinum prices have surged higher in recent weeks as investors have sought ways to diversify their portfolios. Supply constraints have also pushed prices higher, Hansen said, and the metals increasingly look like a 'rational hedge against political and financial instability.' 'These commodities are viewed as politically neutral; unlike sovereign bonds or foreign currencies, they carry no counterparty risk and are not tied to any nation's credit rating,' Hansen said. 'While we remain cautious about predicting an imminent surge to new all-time highs, the macroeconomic backdrop is increasingly supportive of precious metals.' Precious metal prices have also pushed higher as investors have picked up on budding rallies, building a momentum-driven trend, according to Steve Sosnick, chief strategist at Interactive Brokers. Bank of America's survey of global fund managers in May showed that gold was the most crowded trade for the second month in a row. That snapped the Magnificent Seven tech stocks' 24-month streak as the most crowded trade. During the first quarter of the year, gold posted its strongest quarterly return since 1986. The yellow metal is up 27.5% this year, following its 27% surge from last year. Gold surged higher this year as investors fretted over the uncertain outlook for tariffs. Spot gold prices in April briefly rose above a record high of $3,500 a troy ounce. Gold traded around $3,350 a troy ounce as of Wednesday. Gold is considered a resilient investment and a hedge against inflation, with investors betting it will retain its value when prices rise. While Wall Street has gold fever, the price of gold has also been boosted by central banks around the world, including in India and China, buying bullion to add to their reserves. Gold demand from central banks was a key driver of its price surge in 2024, according to the World Gold Council, a trade group. Another factor driving gold prices higher has been a weaker US dollar, Sosnick said. When the dollar weakens, commodities like gold tend to perform well as it becomes cheaper for foreign investors to buy bullion. The US dollar index, which measures the dollar's strength against six major foreign currencies, is down almost 9% this year. 'Gold continues to consolidate above $3,300, underpinned by persistent geopolitical risks, uncertainty on trade and a soft dollar,' said Peter A. Grant, vice president and senior metals strategist at Zaner Metals, in a Tuesday note. As gold has soared higher, silver has started to catch up. Spot silver prices have surged 24% this year after soaring 21% in 2024. Silver this week crossed $36 a troy ounce and hit its highest level since 2012. Michael DiRienzo, president and CEO at the industry group Silver Institute, told CNN that silver prices have surged higher due to industrial demand and heightened economic uncertainty. 'There's just a lot of concern about the global economy, and when that happens, people turn to hard assets like silver,' DiRienzo said. 'Silver tends to follow gold upwards,' he added. Silver is widely used for industrial purposes, including data centers, solar panels and smartphones, and uncertainty about tariffs has caused demand for silver to surge, DiRienzo said. 'It's really reverting back to its dual use as an industrial metal and as a precious metal,' he said. 'And both sides of the ledger are kind of coming together to push this price forward.' Sustained demand for silver, driven by investors and industry, could push the metal to record highs, according to commodities research firm CPM Group. 'Silver offers an attractive entry point for investors seeking alternatives to high-priced gold, bolstered by its extensive industrial applications,' analysts at CPM Group said in a May note. People can invest in silver or gold in the form of bars and coins, or in the form of exchange-traded funds. The iShares Silver Trust ETF has surged 25% this year alongside the price of silver. The SPDR Gold Trust ETF has surged 27% this year. Sosnick at Interactive Brokers said he also thinks silver's rise has been momentum-driven as traders have tried to join in on the rally. Platinum has also surged alongside silver as a less costly investment than gold. Platinum has gained a whopping 36% this year after falling almost 10% across 2024. Spot platinum prices this week rose above $1,200 a troy ounce and hit their highest level since 2021. 'While gold has dominated the performance of the metals complex over the last year, we are starting to see the laggards like platinum … emerge from bases to catch-up a bit,' said Jonathan Krinsky, chief markets technician at global financial services firm BTIG, in a recent note. The precious metal, which is used in industries including automotive and jewelry, has rallied largely due to demand exceeding supply. Platinum has surged higher in recent weeks after the World Platinum Investment Council, a trade group, projected a deficit for the third year in a row. 'This anticipated shortfall, which will draw down existing above-ground inventories, is being driven by demand from the automotive sector and, notably, a surge in Chinese interest in jewelry, bars and coins,' Saxo Bank's Hansen said. 'Jewelers are the second-biggest platinum buyer after the auto industry,' analysts at Bank of America said in a Friday note. 'After years of declining demand, there is anecdotal evidence that interest in platinum jewelry is now bouncing back in China.' 'Rising gold prices are incentivizing jewelers to diversify, in what represents a change to historical patterns,' the analysts noted.
Bloomberg
an hour ago
- Bloomberg
Divorcing SpaceX Just Isn't Possible Right Now
The public spat between President Donald Trump and Elon Musk, the world's richest person, was unsettling given the power these two men wield and how their verbal tussle quickly escalated to issues that directly affect national security. Trump floated the cancellation of all NASA and Department of Defense contracts with SpaceX, the space-launch and satellite-internet company Musk founded in 2002. Musk countered that he would withdraw the services of the Dragon space capsule, which is the only option now, except for resorting to the Russians, for ferrying astronauts to the International Space Station.
CNN
an hour ago
- CNN
Wall Street is making some seriously weird trades
Wall Street traders hunting for profits might find that the most lucrative investments are in the peculiar market for precious metals. Gold, silver and platinum prices have surged this year as investors have piled into precious metals in search of places to hide from trade war uncertainty. President Donald Trump's chaotic tariff plan has rocked markets, and investors have tried to minimize risk by putting some money in safe haven assets. While gold is historically considered a haven, demand for havens has spilled over into its wonky cousins like silver and platinum. The metals craze is reflected in the numbers: Precious metals are trouncing the US stock market this year. Gold has soared 27.5%, silver is up 24% and platinum has surged a whopping 36%. Meanwhile, after rising by 23% last year and 24% in 2023, the S&P 500 is up less than 3% so far this year; there is an unusual amount of jitters in the normally staid bond market; and the US dollar has broadly weakened after rising 7% last year. As bonds have been volatile and the dollar has weakened amid tariff turmoil, weird investments like silver and platinum have emerged as a way to hedge against the tremendous uncertainty. 'These dynamics have further incentivized investors to diversify away from traditional financial instruments and toward tangible assets,' Ole Hansen, head of commodity strategy at Saxo Bank, said in a Friday note. 'Gold continues to be the primary haven,' Hansen added, 'but with bullion demand showing signs of stalling as investors look for a fresh trigger to propel prices higher, we have instead in recent weeks seen heightened interest in silver (and) platinum.' Silver and platinum prices have surged higher in recent weeks as investors have sought ways to diversify their portfolios. Supply constraints have also pushed prices higher, Hansen said, and the metals increasingly look like a 'rational hedge against political and financial instability.' 'These commodities are viewed as politically neutral; unlike sovereign bonds or foreign currencies, they carry no counterparty risk and are not tied to any nation's credit rating,' Hansen said. 'While we remain cautious about predicting an imminent surge to new all-time highs, the macroeconomic backdrop is increasingly supportive of precious metals.' Precious metal prices have also pushed higher as investors have picked up on budding rallies, building a momentum-driven trend, according to Steve Sosnick, chief strategist at Interactive Brokers. Bank of America's survey of global fund managers in May showed that gold was the most crowded trade for the second month in a row. That snapped the Magnificent Seven tech stocks' 24-month streak as the most crowded trade. During the first quarter of the year, gold posted its strongest quarterly return since 1986. The yellow metal is up 27.5% this year, following its 27% surge from last year. Gold surged higher this year as investors fretted over the uncertain outlook for tariffs. Spot gold prices in April briefly rose above a record high of $3,500 a troy ounce. Gold traded around $3,350 a troy ounce as of Wednesday. Gold is considered a resilient investment and a hedge against inflation, with investors betting it will retain its value when prices rise. While Wall Street has gold fever, the price of gold has also been boosted by central banks around the world, including in India and China, buying bullion to add to their reserves. Gold demand from central banks was a key driver of its price surge in 2024, according to the World Gold Council, a trade group. Another factor driving gold prices higher has been a weaker US dollar, Sosnick said. When the dollar weakens, commodities like gold tend to perform well as it becomes cheaper for foreign investors to buy bullion. The US dollar index, which measures the dollar's strength against six major foreign currencies, is down almost 9% this year. 'Gold continues to consolidate above $3,300, underpinned by persistent geopolitical risks, uncertainty on trade and a soft dollar,' said Peter A. Grant, vice president and senior metals strategist at Zaner Metals, in a Tuesday note. As gold has soared higher, silver has started to catch up. Spot silver prices have surged 24% this year after soaring 21% in 2024. Silver this week crossed $36 a troy ounce and hit its highest level since 2012. Michael DiRienzo, president and CEO at the industry group Silver Institute, told CNN that silver prices have surged higher due to industrial demand and heightened economic uncertainty. 'There's just a lot of concern about the global economy, and when that happens, people turn to hard assets like silver,' DiRienzo said. 'Silver tends to follow gold upwards,' he added. Silver is widely used for industrial purposes, including data centers, solar panels and smartphones, and uncertainty about tariffs has caused demand for silver to surge, DiRienzo said. 'It's really reverting back to its dual use as an industrial metal and as a precious metal,' he said. 'And both sides of the ledger are kind of coming together to push this price forward.' Sustained demand for silver, driven by investors and industry, could push the metal to record highs, according to commodities research firm CPM Group. 'Silver offers an attractive entry point for investors seeking alternatives to high-priced gold, bolstered by its extensive industrial applications,' analysts at CPM Group said in a May note. People can invest in silver or gold in the form of bars and coins, or in the form of exchange-traded funds. The iShares Silver Trust ETF has surged 25% this year alongside the price of silver. The SPDR Gold Trust ETF has surged 27% this year. Sosnick at Interactive Brokers said he also thinks silver's rise has been momentum-driven as traders have tried to join in on the rally. Platinum has also surged alongside silver as a less costly investment than gold. Platinum has gained a whopping 36% this year after falling almost 10% across 2024. Spot platinum prices this week rose above $1,200 a troy ounce and hit their highest level since 2021. 'While gold has dominated the performance of the metals complex over the last year, we are starting to see the laggards like platinum … emerge from bases to catch-up a bit,' said Jonathan Krinsky, chief markets technician at global financial services firm BTIG, in a recent note. The precious metal, which is used in industries including automotive and jewelry, has rallied largely due to demand exceeding supply. Platinum has surged higher in recent weeks after the World Platinum Investment Council, a trade group, projected a deficit for the third year in a row. 'This anticipated shortfall, which will draw down existing above-ground inventories, is being driven by demand from the automotive sector and, notably, a surge in Chinese interest in jewelry, bars and coins,' Saxo Bank's Hansen said. 'Jewelers are the second-biggest platinum buyer after the auto industry,' analysts at Bank of America said in a Friday note. 'After years of declining demand, there is anecdotal evidence that interest in platinum jewelry is now bouncing back in China.' 'Rising gold prices are incentivizing jewelers to diversify, in what represents a change to historical patterns,' the analysts noted.
