The luxury homebuying market has been in a chill compared with the frenzied pace set in 2021. Rising interest rates have meant a pullback by buyers and correspondingly lower asking prices from sellers.
With sellers loath to take a loss, inventory—typically low even in the best of times—has largely been throttled.
So the ultra-rich have increasingly decided to test the high-end rental market over the past year and a half.
The profile of ultra-wealthy renters varies, but Rubinchik said, generally they work in tech, venture capital, private equity or hedge funds. Over her 15-year career, she found that working couples (think DINKs: double income, no kids) or young families tend to pay the highest rents.
The owners of these sorts of properties, on the other hand, have found themselves in a situation where renting has recently become more economically viable as would-be buyers are stuck on the sideline because of interest rates.
“The majority of owners who bought in the last decade would prefer to sell,” Rubinchik said. “But right now, it doesn’t make much sense to do so unless you absolutely have to.”
As a result, the luxury home market swung toward flexibility as opposed to outright ownership.
“People just didn’t want to commit,” said Nina Hatvany, a major luxury real estate broker who has sold more than $4 billion in luxury properties during her career. “And it kicked off this whole cycle that ended up driving up rental prices.”
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