Luxury home sales are surging, with prices hitting all-time highs, according to a new report from Redfin. A typical U.S. luxury home sold for a record $1.17 million in the fourth quarter of 2023, up 8.8% from the same period a year earlier. The Redfin report defines luxury homes as those estimated to be in the top 5% of their respective metro area based on market value.
Redfin, a real estate brokerage, also showed that although high mortgage rates are having a chilling effect on the rest of the market, luxury home prices are rising because so many affluent buyers can buy homes in cash. In fact, nearly half, or 46.5%, of the fourth quarter’s luxury purchases were made in cash. That’s up from 40% a year earlier.
“A lot of luxury buyers are coming in with cash, snapping up expensive homes,” said Heather Mahmood-Corley, a Redfin Premier agent in Phoenix. “High-end homes are selling fast, especially in desirable areas like luxurious Scottsdale, or Tempe, which West Coast transplants love because it’s centrally located. One client recently bought a house in Tempe, flipped it, and it sold for $1.4 million in two days.”
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New listings climbed nearly 20%
Although inventory is well below pre-pandemic levels, new listings of luxury homes jumped 19.7% year-over-year in the fourth quarter, the most significant increase in over two years. This, coupled with an increase in the price of a luxury home, signals that affluent homebuyers and sellers are becoming more active, according to the report.
Why the jump in new listings for luxury homes?
Although the reasons may vary from one part of the country to the next, in general, luxury listings jumped because:
- High-end sellers put their homes on the market to cash out while prices were high
- The mortgage-rate lock-in effect doesn’t hold back affluent buyers as much as middle-income buyers
- New listings had a lot of room to grow, as they were sitting at their lowest level in a decade at the end of 2022
“More luxury listings will temper price growth as the year goes on,” said Redfin Senior Economist Sheharyar Bokhari. “Overall, that’s a good thing for the high-end market: Sellers will still fetch fair prices, buyers will have more to choose from and sales should tick up.”
10 most expensive U.S. home sales: Q4 2023
- Miami, FL (Indian Creek Village): $79M
- New York, NY: $75M
- New York, NY: $65.6M
- Aspen, CO (Glenwood Springs): $60M
- New York, NY: $47M
- Aspen, CO (Glenwood Springs): $42.3M
- San Francisco, CA (Atherton): $40M
- Fort Lauderdale, FL: $40M
- Miami, FL (Miami Beach): $35.4M
- Los Angeles, CA: $34.6M
To view the full report, including charts and a full metro-level summary, please visit: https://www.redfin.com/news/luxury-housing-market-q4-2023/
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