The Ultra Wealthy Own Nearly 4 Homes on Average: How This Impacts the US Housing Market

As home prices continue to soar in the wake of the COVID-19 pandemic, a new trend is emerging in the real estate market: ultra-high-net-worth individuals are investing heavily in primary and secondary homes. According to CNBC, home prices are expected to increase by 2.6% in 2024, as the demand for housing outstrips supply.

Ultra-high-net-worth individuals, or UHNWIs, are defined as individuals with a net worth exceeding $30 million, including the value of their primary residence. These wealthy individuals allocate a significant portion of their wealth to real estate, with an average of 32% of their total wealth invested in primary and secondary homes. This is the largest share among other asset classes, such as equities and commercial property.

In 2022, there were approximately 579,000 UHNWIs worldwide, with the numbers projected to reach 744,000 over the next five years. Cities like New York, Tokyo, and San Francisco are home to the most ultra-wealthy individuals globally.

The impact of UHNWIs on the U.S. housing market is significant. As their wealth continues to grow, so does the demand for real estate. In a market with limited supply, the highest bidder often wins the property, driving up home prices even further. With more individuals reaching UHNWI status, the competition for homes may intensify, especially if mortgage rates remain high and supply remains constrained.

Overall, the trend of ultra-wealthy individuals owning multiple homes is reshaping the housing market, influencing prices and competition for properties. As the number of UHNWIs continues to rise, their impact on the real estate market is likely to grow in the coming years.