Wealthy U.S. home buyers raise budgets amid rising property prices

The budgets of wealthy home buyers across the U.S. have risen despite current economic conditions, according to a survey by WSJ Intelligence.

Their average budget for a purchase within the next year now stands at $2.038 million, according to the survey of almost 4,000 Wall Street Journal readers who were polled over two weeks in August for this year’s U.S. Residential Real Estate Study. Respondents have an average household net worth of $4.7 million.

“For the first time ever, [the] budget for those buying a primary residence in the next year exceeds $2 million, which is $154,000 more than last year during this time,” according to the study. That’s a roughly 8% increase in respondents’ budgets compared to a year ago, in line with the roughly 9% increase in U.S. luxury home prices over the past year.

On the whole, however, sentiment is stable despite rising prices. A majority of respondents said they are more optimistic about the property market than they were at the beginning of the year.

“A budget increase despite the current economic climate is encouraging—particularly when mortgage rates are still high,” said Carolyn Romano, director of luxury lifestyle intelligence at The Wall Street Journal | Barron’s.

Meanwhile, the majority of respondents are more optimistic about the property market than they were at the start of the year, though there are several economic factors that remain top of mind when buying a home.

Prices were the primary factor impacting home-buying decisions for all respondents: 86% of those with a net worth below $5 million and 80% of those with a net worth of $5 million or more cited it as their main concern.

“The wealthier cohort still finds these ups and downs top-of-mind—even if their scores were not as high as the under-$5 million segment,” Romano said. “Even the most financially established home buyers are still going to be strategic about their home investments and take all current economic conditions into account.”

For individuals with a net worth below $5 million, interest rates were identified as the second-highest factor impacting their decision to buy a home. For those with a net worth of $5 million or more, it was market volatility and portfolio performance that played significant roles.

Inflation was cited as the third-most important concern for both groups.

These factors are understandably important given that 39% of poll respondents said they would be paying for their home in all cash and 48% would be financing with a mortgage alongside a down payment.