Why the Ultrarich Are Shrinking Their Property Portfolios in Favor of Other Investments

While America's wealthy families are still buying property, the share of their portfolios devoted to real estate has plummeted to the lowest level in six years, signaling a pivot toward other investments.

At the end of the third quarter of 2025, real estate accounted for 17.1% of total assets among the top 10% of U.S. households, down from 20.2% in 2022 and well below the 2004 peak of 22.8%, according to the new Realtor.com® luxury outlook 2026 report.

This marks real estate's smallest share of total wealth since the third quarter of 2019, when it dipped to 16.5%.

Realtor.com senior economist Anthony Smith explains that while wealthy households' total asset bases have grown substantially over the last four years, driven by strong stock market performance, real estate did not keep pace, shrinking its slice of the pie.

Additionally, ultra-high-net-worth individuals have also increasingly allocated toward stocks, with the S&P 500 posting massive gains from early 2022 to early 2026, particularly in the AI and technology sector, further diluting real estate's footprint.

Alexander Kalla, a San Francisco Bay Area–based real estate agent, says he has noticed a strategic shift in his wealthy clients' investment strategy, which he described as a "rebalancing" rather than an "exit" from the property ecosystem.

"After the appreciation of the early 2020s, many of my clients found themselves 'overweight' in real estate," Kalla tells Realtor.com. "Today, they are more interested in private credit and AI infrastructure."

The agent says that in the Bay Area, he has observed a significant shift toward AI private equity.

"Many clients are selling off secondary properties or investment rentals to free up available cash, ensuring they have the liquid capital ready to invest in AI," says Kalla. "Instead of keeping wealth locked in physical assets, they want the flexibility to move quickly when high-growth tech opportunities arise."

The real estate professional points out, however, that the primary driver behind this shift is not a lack of faith in property, but a cold, hard cost-benefit analysis.

"Carrying costs for luxury homes are high. High-net-worth buyers are now asking, 'Does this property provide a lifestyle or utility that justifies the capital, or could that capital be more efficient in a 9% yield private credit fund?'" says Kalla.

According to the agent, rather than harming the luxury housing segment, this pullback actually puts it on a more solid footing by filtering out volatility.

"The speculative buyers have left, leaving behind buyers who view their homes as safe havens for generational wealth," adds Kalla. "In the Bay Area, we aren't seeing a lack of demand, but rather a disciplined demand."

The economist Smith agrees, arguing that when real estate represents a smaller share of total wealth, high-net-worth buyers are less exposed to real estate downturns and are more financially flexible. That means purchases can be more discretionary and cash-funded, which supports seller patience and pricing stability.

"Luxury demand is also less likely to evaporate in a downturn since buyers aren't stretched thin," adds the economist.

Across the country in Miami, Kevin Rutois, a luxury real estate adviser at Rutois International Realty specializing in executive clientele, continues to see sustained demand for premium properties among affluent buyers, who view high-quality real estate as a finite, sought-after commodity.

However, he tells Realtor.com the diminishing of real estate in wealthy households' portfolios as reflected in the data analysis does not come as a surprise, citing the same economic trade-offs as his Bay Area colleague.

"Business is all about opportunity cost, and what the best investment vehicle is for an investor to maximize their returns," says Rutois. "With the global economy making a huge shift right now, there are tons of eyes and focus on AI."

Many high-net-worth individuals are investing heavily in companies on the front lines of the tech revolution, which Rutois says may be taking some of their capital away from real estate "temporarily" through the duration of the AI boom.

"My clients know that finite assets are always a safe bet, and a safe diversification strategy," he adds.  

Luxury market stabilizes in 2026

A broader look at the premium housing segment reveals that the market has stabilized at the start of 2026. The national entry point to the luxury tier, defined as the top 10% of listings, has decreased 0.6% year over year to $1.2 million, while the top 1 % threshold edged down from $5.94 million to $5.6 million.

However, a closer study of the data shows that the entry point to the top of the market has consistently climbed since September 2025, reflecting a sustained momentum in the ultra-luxury ecosystem while the broader luxury market normalizes.

Meanwhile, last year concluded with the national share of million-dollar listings settling at 13.2%, down from 13.7% from a year prior, reflecting a price acceleration cooldown. 

However, the housing market remains deeply fragmented, reflecting significant regional variations. 

At the metro level, San Jose, CA, stood out for having the highest share of listings priced at $1 million and up across the 50 largest metros, exceeding 56%, followed by Los Angeles (50.6%), and San Diego (42.2%). On the East Coast, roughly a third of all for-sale homes in Boston and New York were in seven-figure territory.

"The luxury housing market has moved past much of the post-pandemic recalibrations," concludes Smith, looking at the market as a whole. "The year is shaping up to be a healthy normalization within luxury real estate."