Is the luxury market collapsing?

The luxury market is often considered more resilient than other parts of the economy, but recent reports of falling demand for luxury consumer goods among the wealthiest shoppers are giving brands reason to worry.

The Saks Global Luxury Pulse, with questions fielded in late April, showed 47% of consumers planning to spend the same or more on luxury items in the next three months. At first blush that seems like a respectable number but that’s the lowest level since the Saks Global Luxury Pulse began tracking in April 2023 — and it’s an 11% decline since its last quarterly survey.

On June 18, WWD focused on a report by Bernstein Private Wealth Management and survey results from Agility Research and Strategy. “Since the pandemic ended, ultra-high-net-worth customers have been the driving force behind luxury sales as the less-affluent, aspirational shoppers have put the brakes on spending. But the enthusiasm of those high-net-worth individuals may be waning,” WWD reports. In fact, the Agility survey showed “a sharp deterioration” in the wealthiest consumers’ intention to spend in the first half of this year, according to WWD.

A day later, the consultancy Bain & Co., released a study showing sales of personal luxury goods continuing a decline that began in 2024. This year, sales are expected to drop 2% to 5%, which the consultancy described as “slowing down but not collapsing.”

But, as Pamela Danziger, president of Unity Marketing and an expert on affluent consumers, said of the Bain study: “Not since the 2008-2009 financial crisis has the luxury market experienced such a significant contraction, except for the 2020 Covid pandemic.”

What’s causing the downturn? Primarily, it’s the same fear that’s slowing spending among other income groups: economic uncertainty, although wealthier consumers are more likely to be concerned about the future of their investments than lower income groups, who tend to be more focused on the future of their paychecks.

None of that recent data sounds particularly encouraging for producers of luxury home goods or the interior designers who serve high-end clients.

What’s happening with luxury residential real estate?

But a dive into recent reports on the luxury housing market gives slightly more reason for optimism.

Coldwell Banker Global Luxury’s Mid-Year Report 2025 shows that while “aspirational affluent buyers are becoming more selective and price sensitive, weighing market shifts carefully before making a move,” the ultra-wealthy aren’t delaying their home buying and selling plans.

Overall, the luxury real estate marketing was resilient in the first half of the year, with median sales prices for single-family homes up 1.8% over last year and prices of attached homes up 8.4%. And, the Coldwell Banker report notes, the inventory of luxury homes is at a two-year high, “giving buyers more choice and negotiating room.”

It makes sense, right? Real estate remains a good investment and gives luxury consumers a safe place to put their money, even in these uncertain times.

There are two nuggets in the Coldwell Banker report that I thought were particularly interesting for interior designers to note.

First, is the emergence of two types of buyers, which the report describes as “the ‘no-compromise’ buyer who will pay top dollar for turnkey quality in prime locations, and the ‘smart’ buyer who is value-conscious and willing to consider location trade-offs or renovations if the numbers make sense.”

Second, “a new wave of younger buyers is making its mark: 43% of surveyed luxury property specialists report a rise in millennial and Gen Z purchases, while 29% report stable or growing Gen X activity,” the Coldwell Banker report says. “These buyers want homes that are move-in ready, sustainable, tech-forward and flexible for modern living.”

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Those are opportunities for interior designers, whether working with builders and investment buyers to create those turnkey, move-in ready homes or in aiding those “smart” buyers who are open to renovating a not-quite-perfect purchase.

Slowing but not stalling

The June 2025 Luxury Market Report from Colibri Real Estate’s Institute for Luxury Home Marketing indicates an overall slowdown in the luxury residential real estate market, but “the deceleration has not been as steep as many anticipated.”

“At the same time,” the report says, “luxury home values remain resilient, underscoring the sector’s distinct durability in the face of broader economic uncertainty.”

Like Coldwell Banker, this report notes modest gains in luxury home prices that are outpacing price increases in other parts of the housing market.  

“As summer unfolds, expect more of the same: steady pricing, selective movement and a slow but deliberate pace,” the Institute for Luxury Home Marketing report says. “The fundamentals remain intact, but decisions, for both buyers and sellers, will be made with far more deliberation than in years past.”

The appeal of residential real estate for affluent homeowners is more than a financial hedge, the report says: “A well-located property in a world-class city or resort market provides not only a store of value, but also a tangible lifestyle benefit: a place to live, work, retreat, entertain and, increasingly, to heal and recharge. That dual function of asset and sanctuary makes it uniquely appealing.”

And that, too, is an opportunity for the design community. Because there is no better group to help luxury homeowners create the spaces that will give them those many lifestyle benefits.

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