The luxury housing market is still red hot. A typical luxury home sold for $1.18 million in the second 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 up 3.8% to a median price of $342,500.
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 6.95% and 7%. Elevated mortgage rates have driven down demand for the average American homebuyer, but mortgage rates remain irrelevant to cash buyers.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Nearly half (43.7%) of luxury homes bought in the second quarter were purchased in cash. In contrast, non-luxury sales haven’t posted an increase since the end of 2021. In fact, sales of non-luxury homes decreased 3.4% 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 second quarter of 2024, the total number of luxury homes for sale rose 9.7% from a year earlier, according to the report. That’s compared with a 3.4% decline in non-luxury inventory.
New listings of luxury homes were up 11% from a year earlier, the second consecutive quarter of double-digit increases. That’s roughly four times bigger than the 2.6% 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
- Glenwood Springs, CO (Aspen): $77M
- Glenwood Springs, CO (Aspen): $66.5M
- Los Angeles, CA: $62.8M
- Miami, FL (Miami Beach): $62.5M
- Glenwood Springs, CO (Aspen): $59M
- West Palm Beach, FL (Palm Beach): $51.3M
- West Palm Beach, FL (Highland Beach) $50M
- West Palm Beach, FL (Palm Beach): $49.6M
- Glenwood Springs, CO (Aspen): $48.8M
- Glenwood Springs, CO (Woody Creek): $46M
View the full report, including charts and a full metro-level breakdown.
Related Content
-
Dow Adds 646 Points, Hits New Highs: Stock Market TodayIt was "boom" for the Dow but "bust" for the Nasdaq following a December Fed meeting that was less hawkish than expected.
-
5 Types of Gifts the IRS Won’t Tax: Even If They’re BigGift Tax Several categories of gifts don’t count toward annual gift tax limits. Here's what you need to know.
-
The 'Scrooge' Strategy: How to Turn Your Old Junk Into a Tax DeductionTax Deductions We break down the IRS rules for non-cash charitable contributions. Plus, here's a handy checklist before you donate to charity this year.
