The affordability crunch has reached the luxury market, according to The Agency’s inaugural Red Paper Mid-Year Report. The report, which dives into six major trends from the Gen-X and Millennial wealth transfer to the impact of artificial intelligence, contextualizes proprietary and third-party sales data with insights from The Agency’s global network of agents.
Mauricio Umansky | The Agency
“We are seeing some of the most consequential shifts in buyer behavior and market dynamics in recent memory,” said Mauricio Umansky, CEO and Founder of The Agency, in a prepared statement. “This report gives our clients and agents a precise, real-time examination on where the market stands and, more importantly, where it is headed.”
The report revealed that the share of homebuyers with upper-middle-class incomes has risen 210 percent since 1979, going from 10 percent to 31 percent of the U.S. adult population. That — matched with a 142 percent increase in home equity since 2020 and three years of record stock market gains — has increased the number of homebuyers who can afford entry-level luxury homes priced between $1 million and $5 million.
However, inventory levels don’t match demand, creating hyper-competitive landscapes in key luxury markets, including Anchorage, Bend, Dallas, Marblehead, and Hilton Head.
- As of April, Anchorage had only 150 homes for sale, pushing the starting luxury existing-home listing price up from $750K to $1 million. Homebuilders are attempting to fill the gap; however, new builds are exponentially more expensive, starting at $2-$3 million.
- In Bend, homebuyers are competing for homes priced between $2 and $2.5 million, with a 2-month supply at the current sales pace. There’s more availability at the $1-$2 million range, but homebuyers are willing to pay a premium for the acreage and privacy that a higher price point provides, especially as remote workers continue to flock to the area.
- Luxury demand is booming in Dallas, with locals and outsiders from California, New York, and Washington, D.C., all looking to live in the city’s top-notch neighborhoods. However, robust home price appreciation and demand have driven up prices in Highland Park and University Park, meaning that entry-level luxury buyers will need to go to the city’s outskirts to find properties listed at $1 million.
- Investors, second-home buyers and retirees are putting pressure on Hilton Head, with those groups snapping up the few properties in the $1 to $3 million range. An inventory boost doesn’t seem to be in the cards, the report said, as homesellers are reluctant to let go of historically low mortgage rates and reenter the market at higher price points, with higher mortgage rates and six-figure private club initiation fees.
- Boston’s Marblehead only has nine listings priced between $1 and $3 million, as homeowners are still reeling from the mortgage “lock-in effect.” Market shifts mean buyers within that price range are no longer getting a “big house,” but the proximity to outdoor amenities in New Hampshire, Vermont, and Maine is worth giving up space.
Some U.S. homebuyers are looking to foreign locales to stretch their buck, with the report highlighting Canada and Spain as starter-level hotspots.
“Inventory in Canada is the opposite of the U.S., with more luxury homes available now than in 2019,” The Agency Managing Partner Steve Bailey said of the firm’s Waterloo, Brantford, Oakville, Muskoka, Toronto West, York, Niagara, and Halifax regions. “In Canada, our mortgages have terms of five years, so even if you have a 25-year loan, you need to renew it every five years.”
“We’re seeing a more balanced market now, with at least six months of inventory in the C$1 million to C$3 million price range (US$731,000 to US$2.2 million),” he added.
Meanwhile, in Spain, Madrid offers a 40 to 60 percent discount on comparable properties in other European hubs, like London and Paris. However, U.S. homebuyers interested in Madrid should act sooner rather than later, as a surge in demand is pushing prices up.
“Our luxury threshold used to be €800,000 to €1 million (about US$935,000 to US$1.17 million), but now luxury costs €3 million (about US$3.5 million),” The Agency Madrid Managing Partner Patricio Guzman said. “We’ve seen a big influx of investors from Venezuela, Mexico, and Colombia in the past few years, which rapidly pushed up prices.”
The Agency President Rainy Hake Austin said the report reflects how quickly the market has changed since January, and the need to proactively adjust to those changes.
“The Agency has built its reputation on staying ahead of the market, and this mid-year report is a direct extension of that commitment,” she said. “It gives our agents the intelligence they need to guide their clients with confidence through the rest of 2026 and beyond.”
