Zillow Finds Luxury Home Values Rising Faster Than Typical Homes

(Illustration courtesy of Zillow)

Luxury home value growth, which has consistently lagged the market’s middle tier over the past several years, now outpaces appreciation on typical homes, a new Zillow analysis shows.

The typical luxury home nationwide — defined for this analysis as the most valuable 5% of homes in a given region — is worth about $1,620,000. Among the 50 largest U.S. metro areas, the typical luxury home ranges from a low of just under $750,000 in Buffalo to more than $5.3 million in San Jose.

Luxury home values across the U.S. are 3.9% higher than a year ago. That’s faster appreciation than the 3.2% annual growth for the typical U.S. home. For every month from January 2019 — the earliest year-over-year change in Zillow’s records — through January 2024, typical home values were outpacing luxury homes on an annual basis. But for every month since January, luxury home values have been growing faster.

“Luxury homes can be challenging to sell because the pool of buyers is so much smaller. That’s one reason prices for them usually grow more slowly,” said Anushna Prakash, economic research scientist at Zillow. “We’re seeing a different trend play out this year. Luxury home buyers are likely less affected by higher mortgage rates than a typical buyer, especially repeat buyers who saw their home equity soar over recent years. Many will be able to pay with cash and skip a mortgage payment altogether.”

In addition, high-end home inventory has been slower to recover than inventory overall, helping to keep prices climbing. Inventory in the luxury segment is up 15.7% year over year but is 46.9% below pre-pandemic norms. By comparison, total inventory is 22.7% higher than last year and about 32.6% below pre-pandemic averages.