Miami Beach is a highly popular destination for real estate investors and also for homeowners who appreciate the area's vibrant lifestyle
Recent record-breaking sales showcase the property market’s strength and appetite for premium and luxury real estate.
Whether driven by economic opportunities or the desire for a lifestyle to share with friends and family, property purchases by high-net-worth individuals in 2025, when the luxury real estate market outperformed the overall housing market, position the sector for continued strength.
“The general real estate market was more impacted by elevated interest rates and affordability issues such as higher prices,” said Philip A. White Jr., president/CEO of Sotheby’s International Realty, in the Luxury Outlook report, “but the luxury real estate market is positioned for continued outperformance, building on 2025’s robust foundation, which included areas seeing increased inventory, growing international homebuyer activity and a larger percentage of all-cash sales, particularly at the higher end.”
While market performance depends on a variety of factors, the Sotheby’s International Realty affiliated agents who primarily sell homes in the $10 million and above range were the most optimistic about their global markets for 2026, according to the 2026 Sotheby’s International Realty agent survey.
“We expect global sales to further strengthen, as luxury property buyers are less constrained by geography,” Mr. White said.
“The fundamentals supporting luxury real estate remain strong,” he said. “We are seeing sustained wealth creation at the high end, inventory remains constrained in premier markets with some growth, and lifestyle-driven demand shows no signs of stopping.”
In the United States, the contrast between the luxury and general housing markets is significant, according to Lawrence Yun, chief economist and senior vice president of research at the National Association of REALTORS® (NAR), the report stated.
“The upper end has seen huge home equity gains, so if homeowners in that price range decide to sell, they have additional buying power,” Mr. Yun said in the report.
“We’ve also seen the stock market reach an all-time high [in October 2025], which can loosen up the purse strings,” he said.
Homebuyers at the very high end of housing markets tend to be impervious to macroeconomic factors, said Mark Zandi, chief economist at Moody’s Analytics, in the report.
“They’re in great financial shape,” he said. “At the lower end of the luxury market spectrum, homebuyers are a little more sensitive to their overall net worth and the stock market.”
The threshold for a luxury home in the U.S. now starts at $1.3 million nationally and is much higher in some markets, according to research released in September 2025 by Realtor.com, which defines “entry-level” as within the top 10 percent most expensive homes.
“High-end” luxury, within the top 5 percent of the market, starts at $2 million nationally and “ultra-luxury,” the top 1 percent, starts at $5.4 million.
In 2016, the entry point for a luxury home nationally was just $796,922, according to Realtor.com, while today in Los Angeles, California, entry-level luxury starts at $3.9 million, and in New York City at $2.8 million.
Despite the potential headwinds of slower job growth and inflation, Mr. Yun was optimistic about the prospects for the upper end of the housing market in 2026.
If mortgage rates continue to decline, as they have according to a November 2025 report by mortgage company Freddie Mac, he anticipates a surge of demand.
“Interest rate stability, if achieved, could unlock significant additional homebuyer activity,” Mr. White said.
“Ultra-high-net-worth individuals [UHNWIs] are less rate-sensitive, but we know they are inclined to be more active when financial markets demonstrate stability,” he said.
Mr. Yun expects that, following the rate cuts in September, October and December 2025, the Federal Reserve will continue to lower interest rates incrementally, which could in turn help lower mortgage rates.
“I expect the economy to continue to hum along nicely, with stable unemployment rates and respectable 2 percent GDP growth into at least the middle of 2026,” he said.
Stock market performance also had an impact on luxury homebuying.
“The luxury housing market stalled for a short time in March 2025, when the stock market corrected, but since then it has been outperforming the lower end,” Mr. Yun said.
“I can’t predict exactly what will happen with the stock market, but based on its current performance, the outlook for luxury real estate in 2026 is bright,” he said.
Despite some volatility, the overall strong stock market performance of the last two years has increased the net worth of households, which in turn benefits the luxury real estate market, Mr. White said in the report.
“We’re also seeing that luxury homebuyers are younger, which is a function of wealth creation and the transfer of wealth to a new generation,” he said. “This is in contrast to the overall housing market, where homebuyers are older.”
Another trend is that periods of high inflation can spur the sales of luxury properties as a hedge.
Values typically rise along with inflation, adding to profitability for home sellers, and inflation levels have hovered around 3 percent, according to data released by the U.S. Department of Labor in October 2025.
In the general housing market, the government-backed mortgage provider Fannie Mae predicts that home sales – including existing homes and new-builds – will rebound in 2026, rising an estimated 9.2 percent over the previous year, according to a September 2025 report by Real Estate News.
However, the luxury end of the market is where the momentum has sustained.
“Recent record-breaking sales demonstrate the property market’s strength and appetite for premium properties,” Mr. White said.
“In downtown Manhattan, New York, a penthouse is under contract for $87.5 million, and a co-op in San Francisco, California, sold for $24 million,” he pointed out.
“In Abu Dhabi, a penthouse in the Four Seasons Private Residences at Saadiyat Beach – which is still under construction – sold for $54.5 million, well above the previous record price of $37.3 million set in 2024, according to Abu Dhabi Sotheby’s International Realty.
“These transactions, as well as a record sale in Old Greenwich, Connecticut, for $21 million and a record sale for $50 million in San Diego, California, signal sustained demand at the highest levels.”
More excerpts from the Sotheby’s International Realty Luxury Outlook 2026 report’s preface:
The report also reveals there are effectively two real estate markets – the luxury market and the general market – which perform differently. That phenomenon is seen not just in real estate but also in banking, finance and even the airline industry, where Delta Air Lines is focusing its growth in the premium sector, as reported by The Wall Street Journal in October 2025.
The resilience of the luxury real estate market reflects a premium economic foundation that provides greater stability against volatility.
Our research also demonstrates that luxury property buyers are less constrained by geography and macroeconomic factors than other homebuyers.
Sustained wealth creation through real estate and equity investments continues to be a key driver of global luxury markets.
Some good news from 2025 that bodes well for the luxury real estate market in 2026 is that inventory levels have rebounded to where they were pre-pandemic.
A balanced real estate market is healthier and more sustainable, with more options for homebuyers.
To respond to changing market conditions, both home sellers and homebuyers should consider the “first mover advantage” – being the first to act decisively when opportunities arise or shift. This is often seen in development projects that are the first to adjust their pricing.
These projects often gain momentum and attract more offers, which snowballs into the development becoming the hottest in the market.
For home sellers, that means pricing realistically rather than opportunistically and considering the potential negative impact of carrying costs if they decide to wait a year or two to sell.
For homebuyers, the “first mover advantage” can mean acting quickly when a once-in-a-generation opportunity arises.
In New York City’s West Village, a penthouse recently went into contract for $87.5 million with Nikki Field of Sotheby’s International Realty – East Side Manhattan Brokerage representing the buyer. The residence is expected to close around early 2027 and will mark a record-setting deal for downtown Manhattan.
Beyond market dynamics, this year’s report examines the broader forces shaping luxury real estate decisions.
We explore how political and economic policies impact the upper end of residential real estate markets, the rising influence of cryptocurrency, fluctuating inventory in the United States and global markets, and how major global sporting events can create lasting impacts on the luxury housing markets in host cities when paired with thoughtful urban planning in the wider area.
Today’s wealthy homebuyers are also prioritizing safety and privacy in ways that are reshaping design, from advanced security systems to backup power generators that ensure uninterrupted comfort and protection.
We’re also seeing a meaningful shift toward multigenerational living among wealthy households.
This trend is about more than a lifestyle – although clearly one major goal is spending time with loved ones. It is also about long-term estate planning and legacy building, a way homeowners can transfer some of their wealth during their lifetime by building or buying a home for their heirs.
ULTIMATELY, LUXURY REAL ESTATE purchases are about much more than a financial investment. They are lifestyle-driven choices shaped by the amenities and experiences in any given location that offer the relaxation, stimulation or comfort that wealthy homebuyers seek both for themselves and for their families.
Please click or tap here to access the Sotheby’s International Realty Luxury Outlook for 2026