Luxury Home Prices Slow to 2-Year Low
Redfin, Seattle, said luxury home prices slowed to their lowest rate since 2016 amid stock market fluctuations.
The company’s third quarter analysis found luxury home prices–defined as those among the top 5 percent most expensive homes sold in the quarter-rose by 3.2 percent, to an average $1.7 million, the lowest growth rate since 4th quarter 2016.
By contrast, Redfin said average price for the bottom 95 percent of homes was $343,000, up 3.6 percent in the third quarter compared to a year earlier, but down from the second quarter’s 5.1 percent growth rate.
The report also noted the supply of homes priced $2 million and up fell by 6 percent from a year earlier.
“A great deal of the slowing price growth among luxury homes can be explained by the stock market, a strong indicator of luxury homebuyers’ wealth, or at least their perceived wealth,” said Redfin Chief Economist Daryl Fairweather. “The stock-market fluctuations that began last quarter likely caused some uncertainty among wealthy individuals, which has made luxury buyers more sensitive to price. The swings many people have been watching in their stock portfolios have only grown more frequent in recent weeks, so we expect this trend of slowing luxury home price growth to continue at least into the end of the year.”
Redfin said luxury homes went under contract after an average of 65 days on market, eight fewer days than a year ago, and tied with the second quarter for the fastest pace on record since Redfin began tracking this metric in first quarter 2009. The market for non-luxury homes also sped up in the third quarter, with homes spending an average of 49 days on market, nine fewer days than last year.
“We have seen homes go under contract faster every year since 2015,” Fairweather said. “Buyers are able to look at more homes more quickly in part thanks to real estate technology.”
The report said luxury homes sold fastest in San Jose, Calif., where they found buyers in an average of 19 days, followed by Ashburn, Va. (23); Oakland (28); Seattle (29); and San Francisco (44). Cities in Florida and Nevada saw some of the nation’s largest increases in luxury home prices in the third quarter. In West Palm Beach, Fla., the average sale price for a luxury home shot up 54.5 percent over last year to $1.7 million. Luxury home prices were up 29.6 percent in Reno, Nev., 26.0 percent in Boca Raton, Florida, and 22.5 percent in Miami.
The average price for a luxury home fell the most in Vero Beach, Fla., down 46.1 percent year over year last quarter. Prices for high-end properties also fell in St. Petersburg, Fla., (-16.8%); Fort Lauderdale, Fla., (-16.4%); Sarasota, Fla., (-8.4%); and Delray Beach, Fla. (-8.3%).
