The wealthy may be staying put in their McMansions, at least for now.
New research out of Jefferies on Monday showed the median price for a luxury home in 15 key markets — specifically homes that sold for more than $2.5 million — was up 6% year-over-year in January, a "steep" deceleration from December's 20% gain.
One of most increasingly pressured luxury housing markets based on Jefferies' research was Park City, Utah. The median price sold of a luxury home plunged 30% in January, marking the second straight monthly drop following a 6% decline in December.
In January, the median home price sold in luxury markets was at a 23% discount to listing, wider than November and December. Luxury homes priced above $2.5 million are at a new mult-year peak in terms of days on the market at 61 versus 37 in January 2022.
Besides much higher interest rates, Jefferies thinks broader economic shifts like growing tech layoffs are putting pressuring on the luxury home market.
"March 2023 data shows investment bank bonuses fell 30-50%," Jefferies analyst Jonathan Matuszewski noted. "Mid-level private equity professionals down ~33%."
Matuszewski used the alarming findings to slap luxury home goods retailer RH with a downgrade to Hold from Buy.
"We are downgrading to hold given a luxury housing market that's struggling to stabilize and corporate cuts to headcount / compensation that haven't yet rippled across the luxury home furnishings category," Matuszewski explained. "With the current multiple reasonably nestled between other luxury peers and more risk vs. reward heading into the '23 guide, we move to the sidelines."
RH shares fell slightly in pre-market trading.
The downgrade comes amid several warnings from RH CEO Gary Friedman on the state of the luxury housing market.
"I think that the housing market has collapsed," Friedman told analysts on a December earnings call. "And it went down pretty viciously as interest rates have went up. It's just a lot of uncertainty right now. But one thing I'm certain of the housing market is collapsing at a level I haven't seen since 2008. I haven't seen this kind of drop since 2008."
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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