The luxury housing market is heating up again. A typical luxury home sold for $1.225 million in the first quarter of 2024, up 8.7% from the same period a year earlier, according to a new report from Redfin. Prices of non-luxury homes rose at roughly half that pace, up 4.6% to a median price of $345,000, also a record high.
Redfin defines luxury homes as those estimated to be in the top 5% of their respective metro area, based on market value, and non-luxury homes as those estimated to be in the 35th-65th percentile based on market value.
Luxury home sales soar
Sales of luxury homes are on the upswing again, mainly because high-interest rates are not a deterrent, as many affluent buyers buy houses in cash. The weekly average 30-year fixed mortgage rate hovers between 6.6% and 7%. Elevated mortgage rates have driven down demand for the average American homebuyer, but mortgage rates remain irrelevant to cash buyers.
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Nearly half (46.8%) of luxury homes bought during the three months ending February 29 were purchased in cash. That’s the highest share in at least a decade and up from 44.1% a year earlier. In contrast, non-luxury sales haven’t posted an increase since the end of 2021. In fact, sales of non-luxury homes decreased 4.2% year-over-year, according to the report.
“People with the means to buy high-end homes are jumping in now because they feel confident prices will continue to rise,” said David Palmer, a Redfin Premier agent. “They’re ready to buy with more optimism and less apprehension. It’s a similar sentiment on the selling side:”
Luxury home inventory peaks
In the first quarter of 2024, the total number of luxury homes for sale rose 12.6% from a year earlier, the most significant increase on record, according to the report. That’s compared with a 2.9% decline in non-luxury inventory.
New listings of luxury homes soared 18.5% from a year earlier, the second consecutive quarter of double-digit increases. That’s roughly seven times bigger than the 2.7% increase for non-luxury homes. Inventories peaked for several reasons:
- Mortgage rates have a lesser impact on luxury homeowners because they’re more apt to buy their next home in cash or be financially able to take on a higher rate.
- Owners of luxury homes, many of whom have substantial equity, are putting their houses on the market to cash in while prices are at record highs.
- Luxury home supply has room to grow, as supply remained low during the first quarter of 2023.
10 most expensive U.S. home sales: Q1 2024
- Miami, FL (Surfside): $48M
- Seattle, WA (Medina): $38.9M
- Los Angeles, CA (Malibu): $38.5M
- Glenwood Springs, CO (Aspen): $37M
- Santa Maria, CA (Santa Barbara): $36.8M
- Hilton Head Island, SC (Yemassee): $35M
- Glenwood Springs, CO (Aspen): $33.5M
- West Palm Beach, FL (Lantana): $32.5M
- Santa Maria, CA (Santa Barbara): $32M
- Nashville, TN (Nashville): $32M
View the full report, including charts and a full metro-level breakdown.
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