Article by WSJ

May 2, 2008, 1:50 pm
Wealthy Still Shopping for Vacation Homes

The wealthy think the U.S. is in a recession. But they’re still bullish on real estate, according to a new study.
Last month the Harrison Group, a Connecticut-based marketing and consulting firm, conducted an Internet survey of 638 respondents with incomes of $100,000 or more. The company broke the group of respondents into four categories, ranging from “Upper Middle Class” (incomes of between $100,000 and $149,000, 123 respondents) to “Wealthy” (incomes of $500,000 or more, 119 respondents).
The survey found that more than three-quarters of respondents believed the U.S. was in a recession. The wealthy were the most pessimistic, with 81% agreeing that we’re in recession.
Yet the wealthy were also the most cheery about the real-estate market. Of wealthy respondents, 40% said they plan to buy real estate over the next year. That compares with only 17% for the Upper Middle Class.
The rich who plan to buy homes are mainly looking for leisure properties. One-third plan to buy a vacation home, while about a quarter plan to buy third homes. Only about a quarter plan to buy primary homes.
The most obvious explanation for their bullishness is that the wealthy still have money and aren’t as affected by gas hikes, bread prices or job losses. As we’ve seen, the super high end of the real-estate market (properties that cost $20 million ore more) seems to be holding up the best, although all levels have been affected.
Yet some of the wealthy may be expecting big bargains — and they may be disappointed. Lots of people still have wealth, and they’re willing to pay up for rare properties. That means the bargains they’re waiting for at the high end may not appear.
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