Luxury home prices gain steam, but still lag behind gains of less expensive homes
High-end luxury home prices are staying strong after the rollercoaster ride the housing market has been on this year. The median sale price for luxury homes in the U.S. rose 1.2% year over year, to $825,000 in the three months ending July 31, according to Redfin.
In the spring, when the pandemic set in, luxury home prices declined 1.7% as the U.S. dealt with COVID-19.
Over the last three months that trend has reversed, and some areas have seen much higher increases. Miami had the largest increase in prices of high-end homes, jumping 10.2% year over year. Both Phoenix and New Brunswick, New Jersey, followed closely behind at 9%.
In terms of listings, San Francisco saw the greatest increase in new luxury listings in the last three months, up by 71.7% year over year. West Palm Beach, Florida, followed with a 53.7% increase in listings.
After the initial COVID-19 shock, new listings of luxury homes ticked back up 4.7% year over year in the three months ending July 31 after sinking a record 16.3% during the three months ending May 31, Redfin said.
“This pandemic-induced recession is unlike any past recession, and its effect on luxury housing is similarly incomparable,” said Redfin Chief Economist Daryl Fairweather.
“Now more than ever, homebuyers are seeking out features long associated with luxury homes, like spacious yards, home offices, gyms and private swimming pools,” Fairweather said. “And that shift in buyer preferences means the luxury housing market isn’t suffering like it has in past recessions, when homebuyers mercilessly cut their budgets.”
That shift can be seen in the popularity of luxury mountain towns, where agents are seeing more action now as people retreat to their second home where there is more space and room to work and live in the same dwelling.
Looking forward, Fairweather said that the third quarter will remain strong given recent gains in the stock market, where high-end homebuyers hold a lot of their wealth.
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