The US housing market is currently far from uniform in its behavior. As mortgage rates decline for the third consecutive week, the spring selling season, which had been sluggish, appears to be regaining momentum. According to Freddie Mac's latest data released on April 23, the average rate for a 30-year fixed mortgage fell to 6.23%. Although this remains above the sub-6% levels seen in late February, it marks a notable drop from the 6.81% recorded a year earlier. The Mortgage Bankers Association (MBA) also reported that mortgage application volume increased by 7.9% in the week ending April 17, ending a streak of declines.
However, this modest recovery in data has not bridged the market's divides. According to several experienced US real estate agents, the current market is not monolithic. Instead, influenced by interest rate fluctuations and economic expectations, it has developed an "E-shaped" divergence pattern. Specifically, ultra-luxury homes at the top end have become safe-haven assets for high-net-worth individuals, comparable to "bank deposits." Middle-class buyers, facing uncertainty from Silicon Valley layoff rumors and high borrowing costs, have adopted a wait-and-see approach. Meanwhile, lower-end investment properties are undergoing a shakeout, pressured by cash flow shortages and declining valuations.
Middle-class buyers are exercising extreme caution. Aya Yan Liang, an agent with Sotheby's International Realty in Menlo Park, San Francisco, noted that Silicon Valley's middle-income group is highly sensitive to shifts in the job market. She provided examples: one buyer, originally planning to invest $1–2 million in a property, has paused due to geopolitical tensions. Another couple, considering a $5–6 million home, immediately halted their search after rumors of layoffs at Meta, where the wife works—even though no layoffs had been confirmed. Liang believes that frequent layoff rumors at major tech firms have created widespread insecurity among engineers, directly impacting the demand for homes in the $1–2 million range in Silicon Valley.
Becco Zou, an agent with Compass in Kirkland, Seattle, added that today's buyers are exceptionally selective. "Many tech workers now want turnkey homes because they lack time for renovations. I have to advise sellers on specific upgrades to meet this demand. Recently, I arranged for a contractor to renovate a seller's home over one month to prepare it for sale," she said.
While this defensive mindset spreads, another segment of the market is experiencing intense competition for available properties. Veronica Xu Resh, an agent with Sotheby's International Realty in Ridgecrest, California, observed that despite rising interest rates due to geopolitical factors, market activity in Los Angeles and surrounding areas has been surprisingly strong this year. Well-maintained homes priced between $1.5 million and $2.5 million are selling particularly quickly.
She shared an example: one of her client couples participated in bidding for two properties this year. The first attracted 10 offers; the couple raised their bid to $1.55 million in the second round, but the seller demanded $1.65 million to close, leading the couple to walk away due to overvaluation. The second property received four offers. The couple prepared a $1 million down payment and seemed confident, but a competitor won by waiving the inspection contingency. However, Xu Resh noted that speculative buyers have decreased as home prices adjust. Previously, a $1 million property in the area would typically appreciate by about 10% the following year, but that trend has weakened.
At the top of the market, luxury homes are behaving like safe deposits. While the middle class weighs budgets under the shadow of layoffs, high-net-worth buyers follow a different logic. Liang Yan reported that the ultra-luxury segment, particularly homes above $15 million, is "even more active." In Palo Alto, home to Stanford University, a $30 million mansion sold in just one weekend without ever being publicly listed. "For the wealthy, owning a property near Stanford is not just about living there; it's an asset allocation strategy, similar to holding cash in a bank," Liang explained. With about 50% of luxury homes in the area vacant, affluent buyers view them as safe-haven assets. During economic or geopolitical uncertainty, these prime properties attract capital inflows.
Daniel Ho, co-founder and group managing director of Kuala Lumpur-based Asian property tech group Juwai IQI, echoed this view. He noted that in globally recognized innovation and education hubs, real estate has historically shown strong long-term demand and resilience. "Research indicates significant variation in home price performance across cities. Areas with constrained supply and robust demand often outperform the market average over time. These locations benefit from a steady stream of world-class faculty, international students, elite alumni networks, and tech executives, creating demand that is less affected by ordinary economic cycles. When investors grow wary of speculative markets, capital flows into these safe-haven segments," Ho said. In the US, truly resilient assets are found in such irreplaceable locations—including Menlo Park in Silicon Valley, Cambridge near Harvard, core Manhattan in New York, Bellevue in Seattle's Eastside, and Beverly Hills in Los Angeles.
Ho explained that for high-net-worth individuals, investing in these areas is akin to buying long-term insurance against inflation and global instability. "These regions have persistent demand but limited supply due to geographical or zoning constraints, making large-scale new development nearly impossible. In contrast, areas with abundant developable land may see booms but often face oversupply during demand peaks, leading to price and rental pressures," he added. While investment properties reliant on low rates and policy incentives struggle with cash flow as mortgage rates rise, buyers of top-tier luxury homes often use cash or minimal leverage, giving them much higher tolerance for a high-rate environment.
At the lower end of the market, less valuable investment properties are undergoing a painful reevaluation. Tonya Li, an agent with Sotheby's International Realty in Austin, stated that the local investment property market is in a clear correction phase. Some homes that were valued above $400,000 during the pandemic have now fallen by over $100,000. Reflecting on the pandemic-era frenzy, Li noted that low rates and overheated conditions lowered entry barriers, leading to uneven agent quality. In the irrational rush, many properties listed at $400,000 were bid up to $650,000 with encouragement from buyer's agents.
Now, large-scale investors are beginning to buy at discounted prices, while retail investors face being trapped. Li explained that many of these investors were originally from California who bought properties in Austin during the pandemic. Suburban single-family homes, with larger outdoor spaces and monthly rents around $2,000, met the needs of families seeking safe housing. However, over time, tax rates on these investment properties have proven significantly higher than for primary residences, and regulatory limits have restrained rent increases. "Some owners now face monthly losses of $100 to $300 as holding costs exceed rental income," Li said. Although many consider selling at a discount, she advises holding unless urgent funds are needed, as monthly cash flow losses are more manageable than realizing a large capital loss. She remains optimistic about Texas's long-term prospects, expecting the market to improve by next year at the latest.
Daniel Ho recommended shifting investment strategy from pure "asset appreciation" to "stable income generation." Some Asian investors are already pivoting toward cities in the Sun Belt and Midwest that show sustained population growth, improved affordability, and adequate supply. These markets, driven by domestic corporate relocations, have faster inventory recovery, milder price pressures, and better rent-to-price ratios compared to coastal hubs, offering opportunities for risk diversification and value investing.
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