The luxury housing market witnessed its first drop in home prices in three years, sending a potential sign that home prices might start to slow down across the housing market, the latest Redfin luxury home price report said.
The online real estate brokerage explained that a decline in luxury values could indicate that wealthy buyers and foreign investors are stepping out due to volatility in the global markets and fears that prices have climbed too high, too quickly.
It also added that a bigger supply of luxury products might also be pushing prices down.
According to the report, home prices in the luxury market fell 2.2% year over year, while prices in the rest of the market increased 3.8%. This is the first decline since 2012.
Redfin defines the luxury market as the priciest 5% of home sales.
“High-end buyers are usually not weighed down by rates, mortgages or competition from other buyers, but they do look for deals,” said Redfin chief economist Nela Richardson.
“The luxury market was the first to recover from the housing downturn, and now it’s a bellwether of slowing price growth for the rest of the market. Sales at the top end of the market continue to soar, but prices are downshifting,” she added.
Prices fell the most in Scottsdale, Arizona and Boca Raton, Florida, decreasing 15% year over year.
However, not all markets experienced a slowdown, with Washington, Denver, Delray Beach, Florida, and Bend, Oregon posting double-digit, year-over-year price gains in the third quarter.