Local wealthy less bullish on real estate

You can learn a lot from the rich.

Just ask Tim Leach, chief executive of L.A.-based U.S. Trust, which recently released its annual survey of the wealthiest people in America. As one of the wealthiest counties in the country, Orange County ? and more specifically Newport Beach ? played a major role in the study that sought to gather investment sentiments from the nation’s richest 1% of the population.

Polling those with an annual income of more than $300,000 or $5 million in assets, the report found that confidence in the stock market was increasing over time, while the real estate market was decreasingly seen as a growth-oriented investment.

“I think there has been so much focus and concern in the marketplace with interest rates rising that it’s starting to have an impact on real estate investments,” Leach said

The report found that only 48% of respondents expected real estate values to increase over the next year, compared with 72% last year ? one-third said they actually expected real estate values to decrease in the next year, more than double what respondents thought last year.

While Orange County has not seen a cooling of its housing market like other metropolitan areas, it is experiencing a slowdown in home sales in recent weeks.

“We’re definitely seeing houses sit on the market a little longer,” Tricia Moore of the Newport Beach Realtors Assn. said. “But as an investment, real estate in Orange County remains a very strong place to spend your money.”

Leach said more affluent Americans are increasingly returning to the stock market as a source of investment. Part of that growth comes from interests in foreign markets in Europe and Asia, whose economies are growing faster than America’s economy. But even with overseas interests, wealthy Americans’ confidence in the U.S. stock market has jumped 15 points to 63%, reflecting optimism in the U.S. economy.

“After a brief period of uncharacteristic pessimism, affluent investors have returned to their traditional belief in a strong U.S. economy and a healthy U.S. stock market,” Leach said. “At the same time, the affluent seem to realize that stock market gains are unlikely to replicate the inflated levels of the bull market at the end of the last decade.”

Here are some other findings in the report: