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74 74 INVESTMENT GOVERNMENT PROPERTY PRESERVATION Journal LUXURY, INVESTMENT HOME SALES DIP NEARLY 40% Redfin reports that sales of luxury U.S. homes and investment properties fell 38.1% year over year during the three months ending November 30, 2022, marking the largest decline on record, outpacing the record 31.4% decline in the sales of nonluxury homes. e luxury and investment home mar- ket, and the overall housing market have lost momentum this year due to many of the same factors: inflation, relatively high interest rates, a sagging stock market, and fears of a nation- wide recession. But the high-end market has slowed at a sharper clip for a handful of reasons, including: • Luxury goods are often among the first to get cut from budgets during times of economic stress. • Luxury properties are frequently used as investment properties, and with home values and rents poised to fall in 2023, investment prospects are lackluster. • High-end home sales saw outsized growth during the pandemic, so they have more room to fall. • Affluent buyers often have significant funds stored in the stock market, which has been losing value. Redfin found that expensive coastal markets led the decline in high-end home sales. In Nassau County, New York (Long Island), luxury-home sales plummeted 65.6% year over year during the three months ending November 30, 2022, the largest decline among the most populous U.S. metropolitan areas. Long Island was followed by four California metros: • San Diego (-60.4%) • San Jose (-58.7%) • Riverside (-55.6%) • Anaheim (-55.5%) ese markets are prohibitively expensive for most buyers even when the economy is thriving, so it's not surprising more buyers would back off during a downturn. Conversely, the smallest decreases were found in: • Kansas City, Missouri (-20.2%) • Cleveland (-21.5%) • Virginia Beach, Virginia (-26.2%) • Milwaukee (-26.4%) • Charlotte, North Carolina (-28.3%) However, Redfin has found that there are early signs that overall homebuyer demand is beginning to creep back as interest rates decline, which may ultimately cause the decline in luxury sales to ease.