15 Most Expensive Metro Areas to Buy a Luxury Home
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U.S. luxury home prices in the second quarter increased by 8.8% year over year, with the typical home selling for a record $1,180,000, according to a recent analysis from Redfin.
Non-luxury home prices rose by 3.8% to a record-high median of $342,500 in the second quarter.
“The luxury market has withstood the havoc wreaked by high mortgage rates this year, thanks to an abundance of all-cash buyers,” Redfin senior economist Sheharyar Bokhari said in a statement.
“Now that sales are stabilizing and more homes are being listed for sale, it’s unlikely that luxury prices will continue to grow at quite as high a rate,” Bokhari added.
According to the report, buyers at the high end of the market were less likely to be affected by the rate lock-in effect and uncertainty around the direction of mortgage rates, which were above 7% for much of the quarter.
They were also more likely to have benefited from a strong stock market and high levels of home equity.
This spring, 43.7% of luxury homes sold were purchased with all cash, up from 43.2% a year earlier, the report said.
Redfin’s analysis divided all residential properties in the country into tiers based on its estimates of the homes’ market values as of June. Analysts calculated price-tier data in rolling three-month periods, the one in the new report coinciding with the April-to-June period.
The report defines luxury homes as those estimated to be in the top 5% of their respective metro area based on market value. Non-luxury homes are those estimated to be in the 35th to 65th percentile based on market value.
The Post-Pandemic Era
Luxury homes sales in the second quarter ticked up by 0.2% year over year, marking the third consecutive quarter of sales growth, the analysis showed. Non-luxury home sales fell by 3.4% to the lowest second-quarter number in a decade.
Even though the overall market is experiencing far less activity than it did before the pandemic — in large part because of an ongoing supply shortage — the luxury market has made up more ground since then. Luxury sales were down by 12.8% compared with the second quarter of 2019, while non-luxury sales were down by 20.1%.
Luxury inventory rose by 9.7% year over year, making the second quarter the fourth consecutive one of growth following a major dropoff during and after the pandemic. Non-luxury inventory rose by 3.9%. Redfin noted that inventory in both categories remains well below pre-pandemic levels.
The number of new listings of luxury homes increased by 11% in the second quarter, far outpacing the 2.6% increase in new listings of non-luxury homes.
With inventory increasing, luxury homes stayed on the market a median 40 days, two days longer than a year earlier, according to the analysis. Non-luxury homes took three days longer to sell than last year, a median 31 days.
“We are seeing luxury homes selling within 30 to 45 days, but that’s a lot longer than in 2022 when they were flying off the shelf,” Juan Castro, an Orlando, Florida-based Redfin Premier agent, said in the statement.
“International cash buyers are still driving activity, but we have seen a slowdown in local buyers, as it’s really hard to upsize to a luxury home with a 7% mortgage rate,” added Castro.
See the accompanying gallery for the 15 most expensive metro areas for luxury homes.
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