The most expensive home purchased in 2020 was only 3,000 square feet along North Valentine Avenue and the San Joaquin River in Fresno, but it includes pistachio and walnut orchards. Photo contributed

Luxury homebuyers — those buying properties for $1 million or more — are shifting focus by looking smaller, getting into their feelings and pondering deals overseas.

That’s according to the Coldwell Banker Global Luxury survey of 2,001 U.S. consumers with household income of more than $1 million who have purchased a home in the U.S. worth $1 million or more.

In the face of a reset following the homebuying boom of 2020-21, high-end buyers are reevaluating what makes them happy in the face of rising interest rates, inflation and economic uncertainty, according to an executive summary of the Coldwell Bank luxury survey.

Think small

Looking past the palatial spaces of years past, buyers now seek smaller. In an analysis of 20 U.S. markets this year, luxury single-family homes with smaller footprints of 2,500-3,500 square feet sold 18.6% faster than larger single-family homes of 4,500-5,000 square feet.

Think twice

Buyers are in no mood to settle. About 25% of respondents who purchased a home in the last two years said they were not satisfied with their home purchase and were considering a move driven by investment priorities and quality of life. Locations they were most interested in? New York and California.

Think clearly

The wealthy may be gravitating toward real estate that gives them financial, emotional and psychological stability in the face of rising uncertainty, according to the survey. They’re motivated to diversify their portfolios, create generational wealth, make opportunistic buys in traditional luxury centers and seek properties in locations less affected by climate change and extreme weather.

Think globally

About 92% of survey respondents are considering purchasing a property abroad. Conditions including a strong U.S. dollar, rising cost of living, high home prices and political climate are chief motivators.

According to the survey, high-end real estate is still in a strong position coming into 2023. Luxury single-family home prices have seen 60% appreciation since 2017 while luxury attached home prices increased nearly 41%. Four in five affluent respondents believe real estate is a safe investment.

“Newly minted millionaires of the last two years are not only diversifying their real estate assets, but also looking to lessen exposure to higher interest rates in the short term by using cash and other creative financing options,” according to the executive summary.

The assessment is that it’s not quite a buyer’s market — a majority of luxury home markets analyzed were still seller’s markets as of August — but conditions are shifting in buyers’ favor.

“Property hunters have more negotiating power, but they still have to contend with low inventory and high prices,” according to the executive summary.