Luxury sales are outperforming partly because
elevated mortgage rates aren’t a deterrent for many luxury buyers,
as a record 47% of luxury homes were bought in cash at the start of
2024
(NASDAQ: RDFN) — The median-priced U.S. luxury home sold for a
record $1,225,000 in the first quarter, up 8.7% from a year
earlier, according to a new report from Redfin (redfin.com), the
technology-powered real estate brokerage. Prices of non-luxury
homes rose at roughly half the pace; they were up 4.6% to a median
of $345,000, also a record high.
Redfin defines luxury homes as those estimated to be in the top
5% of their respective metro area based on market value, and
non-luxury homes as those estimated to be in the 35th-65th
percentile based on market value.
Luxury prices are rising largely because demand for high-end
homes has held up better than demand for middle-of-the-road homes.
Sales of luxury homes are on the upswing, partly because many
high-end buyers are undeterred by high mortgage rates, with the
share of luxury homes bought in cash sitting at record highs. New
listings of luxury homes are soaring—but not enough to curb the
price growth that comes with rising demand; the total supply of
luxury homes is still far below pre-pandemic levels.
“People with the means to buy high-end homes are jumping in now
because they feel confident prices will continue to rise,” said
David Palmer, a Redfin Premier agent in the Seattle metro, where
the median-priced luxury home sells for $2.7 million. “They’re
ready to buy with more optimism and less apprehension. It’s a
similar sentiment on the selling side: Prices continue to increase
for high-end homes, so homeowners feel it’s a good time to cash in
on their equity. Even though mortgage rates remain elevated and
demand isn’t as high as it was during the pandemic, many homebuyers
and sellers feel the worst of the housing downturn is behind
us.”
Luxury home sales rise for first time since 2021 as record
share of affluent buyers pay cash
Sales of luxury homes rose 2.1% year over year in the first
quarter. Luxury sales started posting year-over-year increases in
January for the first time since August 2021.
Sales of non-luxury homes decreased 4.2% year over year.
Non-luxury sales haven’t posted an increase since the end of
2021.
Sales are growing for luxury homes and declining for non-luxury
homes largely because so many affluent buyers are able to pay in
cash, meaning today’s elevated mortgage rates don’t deter them from
purchasing homes. Nearly half (46.8%) of luxury homes bought during
the three months ending February 29 were purchased in cash. That’s
the highest share in at least a decade and up from 44.1% a year
earlier.
The weekly average 30-year fixed mortgage rate has hovered
between 6.6% and 7% since the beginning of 2024, more than double
pandemic-era record lows. Elevated mortgage rates have driven down
demand for the average American homebuyer, but rates are irrelevant
to cash buyers.
Supply of luxury homes for sale posts biggest year-over-year
increase on record
The total number of luxury homes for sale rose 12.6% from a year
earlier in the first quarter, the biggest increase on record.
That’s compared with a 2.9% decline in non-luxury inventory.
New listings of luxury homes soared 18.5% from a year earlier in
the first quarter, the second consecutive quarter of double-digit
increases. That’s roughly seven times bigger than the 2.7% increase
for non-luxury homes.
Supply of luxury homes is shooting up for several reasons. One,
the mortgage-rate lock-in effect has a lesser impact on luxury
homeowners because they’re more apt to buy their next home in cash
or be in a financial position to take on a higher rate. Two, owners
of luxury homes, many of whom have a lot of equity, are putting
their houses on the market to cash in while prices are at record
highs. Three, luxury supply had a lot of room to grow, as it was
sitting at low levels during the first quarter of 2023.
It’s worth noting that while luxury inventory is on the rise,
total supply and new listings are below typical pre-pandemic
first-quarter levels. Relatively low inventory is one reason luxury
prices are increasing.
Metro-Level Luxury Highlights: Q1 2024
Redfin’s metro-level luxury data includes the 50 most populous
U.S. metros. Some metros are removed from time to time, to ensure
data accuracy. All changes noted below are year-over-year
changes.
- Prices: The median sale price of luxury homes rose most
in Providence, RI (16.2% increase to $1,400,000), New Brunswick, NJ
(15% increase to $1,900,000) and Virginia Beach, VA (12.8% increase
to $1,100,000). It fell in just eight metros, with the biggest
declines in New York (-9.9% to $3,250,000), Austin, TX (-6.9% to
$1,629,300) and Minneapolis (-2% to $975,000).
- Sales: Luxury home sales rose in just over half the
metros. They increased most in Seattle (36.9%), Austin, TX (25.5%)
and San Francisco (23.9%). They decreased most in Newark, NJ
(-23.6%), Philadelphia (-23%) and Detroit (-19.4%).
- Active listings: The total number of luxury homes for
sale increased most in Austin, TX (40.5%), Jacksonville, FL (35.9%)
and Fort Worth, TX (32%). Total inventory fell in 15 metros, with
the biggest declines in Detroit (-16.8%), Atlanta (-14.1%) and
Chicago (-13%).
- New listings: New listings of luxury homes increased
most in Jacksonville, FL (63.6%), Fort Worth, TX (41.7%) and Nassau
County, NY (40.5%). New listings fell in eight metros, with the
biggest declines in Detroit (-17%), Atlanta (-8.2%) and Chicago
(-7.7%).
- Speed of sales: Luxury homes sold fastest in Seattle,
Oakland, CA and San Jose, CA with median days on market of 9, 12
and 12, respectively. They sold slowest in Miami (118 days),
Austin, TX (106) and Nashville, TN (104).
10 Most Expensive U.S. Home Sales: Q1 2024
- Miami, FL (Surfside): $48M
- Seattle, WA (Medina): $38.9M
- Los Angeles, CA (Malibu): $38.5M
- Glenwood Springs, CO (Aspen): $37M
- Santa Maria, CA (Santa Barbara): $36.8M
- Hilton Head Island, SC (Yemassee): $35M
- Glenwood Springs, CO (Aspen): $33.5M
- West Palm Beach, FL (Lantana): $32.5M
- Santa Maria, CA (Santa Barbara): $32M
- Nashville, TN (Nashville): $32M
To view the full report, including charts and a full metro-level
breakdown, please visit:
https://www.redfin.com/news/q1-2024-luxury-report/
About Redfin
Redfin (www.redfin.com) is a technology-powered real estate
company. We help people find a place to live with brokerage,
rentals, lending, title insurance, and renovations services. We run
the country's #1 real estate brokerage site. Our customers can save
thousands in fees while working with a top agent. Our home-buying
customers see homes first with on-demand tours, and our lending and
title services help them close quickly. Customers selling a home
can have our renovations crew fix it up to sell for top dollar. Our
rentals business empowers millions nationwide to find apartments
and houses for rent. Since launching in 2006, we've saved customers
more than $1.6 billion in commissions. We serve more than 100
markets across the U.S. and Canada and employ over 4,000
people.
Redfin’s subsidiaries and affiliated brands include: Bay Equity
Home Loans®, Rent.™, Apartment Guide®, Title Forward® and
WalkScore®.
For more information or to contact a local Redfin real estate
agent, visit www.redfin.com. To learn about housing market trends
and download data, visit the Redfin Data Center. To be added to
Redfin's press release distribution list, email press@redfin.com.
To view Redfin's press center, click here.
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version on businesswire.com: https://www.businesswire.com/news/home/20240419280557/en/
Redfin Journalist Services: Isabelle Novak, 414-861-5861
press@redfin.com
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