The Affluent Effect

As a compulsive market watcher, I have a suspicion: The affluent lead the market. The wealthy are contrarian investors, always doing what the masses aren’t. Why? Because they know what others don’t. They set the trends. They get out when the masses and the media get in… for top dollar. And when it comes to buying their own homes, they are less affected by interest rates because they can afford to pay cash 30% of the time.

Over the years, I’ve heard other Realtors in places like Beverly Hills comment that the high-end leads the market. Meaning, when Joe-Schmoe home sales are down, haute couture Hollywood home sales are up. This is often overlooked by the media because they focus on overall number of sales, ignoring distinct price bands. I wonder, is this true in Reno?

I’ve been tracking market movements pretty closely for almost a year now. And so far, it does appear that the over $2 million range does exactly the opposite of what’s happening in the under $500K range. If the under $500K range is strong, the over $2 million is weak. And vice versa, if the under $500K weakens, the over $2 million seems to strengthen. Even writing this feels a little anecdotal so far, but this is what I’m noticing. Just this month the high end seemed to gather a little steam, even trickling down to the $1-2 million category below it. Is this a real trend? I guess we’ll see. About the affluent