The median sale price for luxury homes nationwide dropped 2.3% year over year to $1,099,521 in the…
The median sale price for luxury homes nationwide dropped 2.3% year over year to $1,099,521 in the 12 weeks ending June 14, according to a new report from real estate brokerage Redfin. This marks one of the biggest declines in luxury home prices since at least the beginning of 2015.
However, the latest data shows the luxury market may be starting to rebound, with the median sale price for homes in the top 5% rising 3.5% year over year for the seven day period ending June 14.
The shorter timeframe has a smaller sample size and is less indicative of long-term trends, but provides a snapshot of recent numbers.
This is according to an analysis that divided all U.S. residential properties into five tiers based on Redfin Estimates of the homes’ market values as of mid-June.
This report defines “luxury” as all the homes estimated to be in the top 5% based on market value.
To represent non-luxury homes, Redfin uses the “middle” price tier, i.e. homes estimated to be in the 36th to 65th percentile for value. Redfin typically reports luxury data on a quarterly basis but released this analysis early because of the reversal in luxury home-sale price growth correlated with the onset of the pandemic.
“The pandemic is playing an outsized role in the luxury market, as very expensive homes are particularly sensitive to periods of economic uncertainty,” said Redfin economist Taylor Marr. “Many luxury buyers are nervous about pouring money into an investment that may be difficult to sell if the economy takes a nosedive.”
Marr continued, “By comparison, people buying starter homes they plan to live in for 10 years are less concerned with volatile financial markets as long as they have money for a down payment and can afford monthly mortgage payments. And although access to credit is loosening up now, it tightened considerably for jumbo loans, which a lot of luxury buyers use, in April and May.”
Luxury price growth reversed course with the impact of the coronavirus pandemic: Price growth for homes in the top 5% had been on the upswing from October 2019 until March. The median luxury price started declining in the 12 weeks ending March 29 and saw its biggest dip (-2.5% YoY) in the 12 weeks ending June 7.
The top 5% of the market took a bigger hit from the pandemic than the rest of the housing market. The median sale price for non-luxury, mid-priced homes rose 4.1% year over year to $265,134 in the 12 weeks ending on June 14. Price growth for non-luxury homes started to reverse in mid-April after an upswing that started at the beginning of the year.
Find out more at www.redfin.com.