The recent volatility in the stock market and cryptocurrencies, fueled by anxiety over the omicron variant, has some would-be homebuyers pressing pause on pricey real estate purchases.

That’s been the case for New York native Neil Kapoor, 36, who toured a luxury home priced at $2.2 million in Puerto Rico last month. With his investments tied up in cryptocurrency, he’s waiting for values to rebound before pulling the trigger. Bitcoin, the gold standard for digital money, has dropped 28% in value recently.

“With the whole [cryptocurrency] market down, that totally changed my dynamic,” says Kapoor, head of business development at CasperLabs, a blockchain technology company. “We might be entering a bear market … so instead of liquidating and buying properties, everyone is holding on to their assets.”

As many wealthy buyers purchasing second, third, or even fourth homes and investment properties have their money tied up in stocks or cryptocurrencies, when the markets are down they have less cash to put into real estate. And since many of these are discretionary purchases, as most of these folks already have primary residences, the buyers may get spooked by the volatility and hold off on any large purchases until the markets settle back down.

Luxury home sales could take an especially pronounced dip in parts of the country like New York City; Miami; San Francisco; Austin, TX; and Denver, CO, where workers—particularly in the tech sector at companies like Amazon, Facebook, Apple, and Google—may be compensated in stock. So when the Dow plunges, so do their assets. And that means they’re less likely to buy real estate, says Jonathan Spears, a Destin, FL-based real estate agent.

“When you have a customer who may have a large stake in Bitcoin, and Bitcoin took a hard swing, their willingness to liquidate goes down tremendously,” Spears says. Most of his buyers  fall into the middle-tier luxury market, looking for homes priced between $2 million and $5 million.

“We’ve had instances where contracts get canceled because the funds that have been waiting to be liquidated are not there entirely,” he adds.

All of the uncertainty playing out in the high end of the sales market is having a ripple effect

While the Austin market, for example, continues to see a slew of luxury home sales, some folks who would have bought luxury homes outright are now eyeing rent-to-own options instead, says James Duncan, a Realtor® at Austin Luxury Realty. Many of his buyers in the $2 million-plus price range are coming from Miami and California, or they’re international buyers.

“I’m not seeing a lot of people cashing out on stock right now,” Duncan says.

Foreign buyers may also be deterred by market volatility. Before the COVID-19 pandemic hit, they shelled out $183 billion on real estate in 2019, according to a report from the National Association of Realtors®. In 2021, they spent just $103 billion, according to a survey NAR sent out in April and May covering the previous 12 months.

“We’re not seeing the foreign traffic,” says Donna Olshan, president of the New York City–based luxury brokerage Olshan Realty. The luxury market in Manhattan began rebounding later this year, but could be hurt again as a slew of countries reenlist travel restrictions, impose new rules, and reinstate lockdown measures.

There were 33 contracts for luxury homes priced at $4 million-plus in New York City signed in the week ending Dec. 12, according to Olshan’s weekly Manhattan report. That’s a dip from 37 from the last week in November.

That could signal some homebuyers are waiting out the market, relocating to second homes, or purchasing in the suburbs or near greater access to outdoor amenities as some employers may delay the return to the office as a result of the variant, Olshan says of the market turbulence.

Still, despite times of uncertainty, the luxury market typically rebounds faster than others, Olshan says. She notes that high-end real estate recovered exponentially after the financial crisis in 2007 and 2008.

“New Yorkers want to keep a foothold in New York City. If there’s a good dip, you go out and you buy. Because the dips don’t last that long,” Olshan says, adding that she’s seen high-end buyer interest coming from San Francisco to New York in particular recently.

In the long term, West Coast markets where many buyers may be looking for more space and access to outdoor activities, such as the Lake Tahoe area as well as Nevada, could see a boom in luxury home sales as homebuyers continue to seek out more space while working remotely, Dolly Lenz, a New York City–based real estate agent of Dolly Lenz Realty, says.

“Somebody who might have bought three weeks ago, because of the variant, may have decided, ‘Let me take a pause. Maybe I’ll come back in the new year, or make my second home my primary,’” she says.

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