The Wealthy are Refusing to Sell

A supply crunch is affecting high-end markets across the country. A look at where inventory is tightest.

Sellers are locked into low rates. Construction costs are about 40% higher than before Covid, putting a damper on new construction. Buildable land is getting ever more scarce.

These are just some of the reasons why some luxury housing markets nationwide are facing inventory crunches and high prices, despite an overall housing slowdown. From California to Connecticut, deep-pocketed buyers are competing over a limited supply of luxury homes, amid a historic decline in listings caused by long-term owners hanging on to properties and home builders failing to keep pace with population growth and demand. Since 2000, the average monthly number of active existing-home listings has dropped 45%, according to a recent report by Compass, which said the U.S. population has grown about 20% in that time. 

As of Jan. 31, for example, the St. Louis metro area had a three-month rolling average of 1.73 months of luxury supply—defined as homes in the top 5% of the market—far below the roughly five months that is generally considered to be a sign of a healthy market, according to real-estate brokerage Redfin.

Meanwhile, in Oakland and San Jose, Calif., just 0.8% of the area’s total luxury housing stock was listed on average over the three months ended Jan. 31, according to Redfin, which analyzed luxury inventory in the 50 most populous U.S. metro areas for The Wall Street Journal. The average in the 50 metros was 2.56% during that time period, Redfin data show. 

“The lack of supply almost perpetuates the lack of supply because sellers don’t have anywhere to go,” said Ken DeLeon of DeLeon Realty in California’s Bay Area. 

Even though luxury buyers tend to be less rate-sensitive, the mortgage lock-in effect is pervasive, said Chen Zhao, head of economic research at Redfin. Some would-be sellers believe if rates come down, buyer demand will increase further, so they may be hanging on to homes until that happens. At the same time, owners whose property value skyrocketed in recent years may opt to keep the property rather than pay capital-gains taxes—unless they are motivated by life circumstances. “It’s very location specific,” Zhao said. 

Here’s a look at five of the country’s tightest luxury housing markets based on levels of supply. 

Las Vegas

For the three months ended Jan. 31, the Las Vegas metro area had an average of about 3.2 months of luxury housing supply—down 32.5% from the same period a year earlier. The supply-demand imbalance has driven prices up in recent years. The median luxury sale price was $1.2 million for the three months ended March 31, compared with $1.1 million for the prior-year period. 

Despite the tight market, the number of luxury sales in Las Vegas jumped 38.67% for the three months ended Jan. 31 compared with the same period last year—the biggest year-over-year jump of the 50 biggest metros nationwide. However, its 2024 level was still far below sales activity recorded at the height of the pandemic between August 2020 and July 2022.

R eal-estate agent Kristen Routh-Silberman of Douglas Elliman said Las Vegas has evolved from an entertainment mecca to a cultural destination that is also an attractive tax haven for well-heeled home buyers.

R outh-Silberman said the recent sale of real-estate developer Rich MacDonald’s personal residence in Henderson, Nev., typifies the market dynamic. The property was listed for around $5 mill market dynamic. The property was listed for around $5 million in 2011, but it didn’t sell. MacDonald put it back on the market asking $12 million in November 2023, and it closed for $10 million in March. 

Routh-Silberman said that in February, there were about five months worth of luxury supply of homes priced at over $1 million, down from 10 months a year prior. (In 2022, there was roughly two years worth of supply.) She said there are also dwindling development sites for luxury homes in the area. “We want to get people to do specs and build more,” she said. “It now appears some big builders are going to flat-out build as much as they can right now to create some inventory.”

Newark, N.J.

The Newark, N.J., metro area—which includes wealthy communities within Morris and Essex counties—had a three-month rolling average of just 1.93 months of supply at the end of January, one of the three lowest among the biggest 50 metros nationwide. During the same period, an average of just 1.6% of the area’s total luxury housing stock was listed on the market, down from 1.8% a year prior; active listings dropped 12.5% year over year. 

In Livingston, a New York City commuter town about 12 miles northwest of downtown Newark, there were 42 luxury homes on the market as of late March, compared with 120 that would be listed in a “normal market,” said Jamie Silverman of Coldwell Banker Realty. She recently sold a house for $4.3 million that was listed in October and got three offers within 30 days. The Newark metro area’s median luxury sale price was $1.65 million for the three months ended March 31, compared with $1.525 million a year earlier. 

The majority of buyers come from New York City, said Cynthia Baker of Lois Schneider Realtor in Summit. “I’m like a Midtown train conductor,” she said. “It’s a fire hose that’s still turned on with buyers since Covid started, and it just has not abated.” 

Baker said the first wave of buyers from the city in 2020 and 2021 snapped up so many homes that there are limited options for house hunters today. Meanwhile, potential sellers looking to downsize have nowhere to go in the area, and are also facing heavy competition for very little inventory, she said. 

There is limited new development in the area, with just a handful of spec homes in Short Hills and Chatham. She recently had a client who snagged a new-construction home by delivering pies to the builder around Thanksgiving. Baker said the builder didn’t want to list the property before it was finished, but the pies opened the door to negotiations and the builder never listed it. “It was a little bit risky” and definitely “gimmicky,” she said, but it worked. The client is in contract to buy the house for north of $3 million.