"The luxury housing market normally takes a hit during recessions as wealthy Americans tighten their purse strings, but this isn't a normal recession," said Redfin chief economist
A handful of
"It's well known in the real estate world that luxury properties typically take longer to sell, but this may be starting to change," said Redfin Sacramento agent
Luxury home sales declined in just two of the 49 most populous
High-End Home Prices Are Growing Faster Than Affordable-Home Prices
Over the past five years, growth in prices of America's most affordable homes has consistently outpaced growth in prices of America's most expensive homes. That is no longer the case.
Luxury home prices increased 6.5% year over year in the third quarter, while prices in the expensive tier rose 7.2%—both outpacing the 2.9% growth in prices of the country's most affordable homes.
"Prices of the most affordable homes are experiencing relatively slow growth because the families who typically buy these homes have been hit especially hard by the pandemic," Fairweather said. "So long as the coronavirus keeps people out of work and the government doesn't provide more stimulus, the owners of America's most affordable homes will continue to see relatively low property value growth because the folks who would normally make offers on their homes will consider it more financially prudent to continue renting instead."
The Supply of Luxury Homes Is Growing
The number of luxury homes for sale increased 8.4% year over year in the third quarter, while the supply of homes in all other price tiers declined.
Luxury housing supply is growing because new listings in this segment of the market are surging. New listings of luxury homes soared 44.9% year over year in the third quarter, while new listings in the bottom three tiers grew less than 5%.
"Luxury listings are skyrocketing because high-end homeowners have the financial means and the flexibility to move during this pandemic," Fairweather said. "The growing supply of luxury homes for sale means that wealthy buyers have more options to choose from and a better chance of finding a home that checks all of their boxes. Meanwhile, buyers who are in search of more affordable homes are grappling with fewer choices and fierce competition."
To read the full report, including metro-level data and analysis, please visit: https://www.redfin.com/news/luxury-real-estate-q3-2020
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