The net worth of America’s wealthier individuals has increased substantially in the five-month period ending in August, and many are choosing to invest their gains in real estate.
That’s according to a report from research firm Wealth-X, which said the recent stock market boom has helped many wealthy individuals in the U.S. to recover wealth that was lost when the country went into shutdown to try and contain the COVID-19 pandemic.
America’s richest people, which Wealth-X defines as those with a net worth of $30 million plus, have recovered most of their pre-pandemic wealth, the report found. Moreover, the number of people in the U.S. that fit into that bracket has risen to 104,440.
“Unlike in ‘typical’ recessions, the bulk of the damage to wealth holdings from the pandemic will most likely have been front-loaded,” the Wealth-X report found. “As the global economy rebounded in the second and third quarters of 2020 from its temporary cessation of activity, helped by extensive stimulus and support programs, there was a broad bounce back in financial markets and renewed opportunities for wealth creation.”
North Americans account for around 36% of the world’s ultrahigh-net-worth people, the report said.
With the rich getting richer, that has translated to a boom for the luxury real estate market, Wealth-X said. It said that larger and more expensive homes are increasingly in demand as buyers seek more space to work from home, and bigger houses to accommodate children that learn remotely.
“The luxury market is leading the recovery,” Danielle Hale, realtor.com’s chief economist, said at the end of June.
Second-home markets are growing in appeal among luxury buyers. Three of the five markets with the largest increases in viewed listings in May were second-home markets: Suffolk County, N.Y., home to The Hamptons; Palm Springs in Riverside County, Calif.; and Greenwich in Fairfield County, Conn., according to realtor.com data.
Many wealthy Americans are eyeing exclusive resort communities, partly with retirement on their minds. Lawrence Yun, chief economist of the National Association of Realtors, told CBS News recently that he is seeing greater sales gains in luxury homes in resort areas that are seen as ideal retirement destinations. The NAR’s data showed that home sales in resort areas rose by 29% in July compared to the same month one year before.
“I think this new economy and working from home can also mean working from a vacation home—that is, a larger home, with more elbow room, that is in more of a vacation destination,” Yun said.
One such area is Aspen, Colorado, which has seen sales of homes priced above $5 million surge.
“Inventory is flying off the shelf,” Jonathan Miller, a real estate appraiser with Miller Samuel, told CBS News of the 800% increase in signed contracts for homes in Aspen.