In the largest increase since 2013, luxury home sales rose 41.5% in the third quarter, according to a new report from Redfin.
While sales in this segment of the housing market have skyrocketed, the sales of medium-priced homes went up only 3% and sales of affordable homes actually declined by 4.2%.
“The luxury housing market normally takes a hit during recessions as wealthy Americans tighten their purse strings, but this isn’t a normal recession,” Redfin Chief Economist Daryl Fairweather said in the report.
“Remote work, record-low mortgage rates and strong stock prices during the pandemic are allowing America’s wealthy families to gobble up expensive houses with home offices and big backyards in the suburbs,” Fairweather said. “Meanwhile, scores of lower- and middle-class Americans have lost their jobs or are still renting in the city because they’re essential workers and have to commute into work, so they’re unable to reap the benefits of homeownership.”
In Q3, the median sale price of luxury homes was $862,700; median sales price for expensive homes was $402,000; median sales price for medium-sized homes was $259,000; median price for affordable homes was $178,000; and the median sales price for the most affordable homes was $90,000.
Notably, the only market with increased inventory was luxury. The number of new homes for sale in this segment of the market was up 8.4% year over year, Redfin said. Meanwhile, the number of expensive homes for sale were down 2.6%; medium-priced homes for sale were down 7.9%; affordable homes for sale were down 7.6%; and the most affordable homes for sale were down 4.8%.
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Much of the increase in luxury home sales came from west coast homebuyers. Specifically, in Sacramento, California, luxury home sales were up 86.1% year over year, the most compared to 49 of the most populous metros. The median luxury home sale price in Sacramento in Q3 was $1,200,000.
Two other California metros top the list of luxury home-sale growth. Riverside sales are up 62.8% while Oakland sales are up 60.9%. Portland, Oregon, also had an increase of 60.6%, as did West Palm Beach, Florida, up 59.7%.
There are only two metros where luxury home sales declined in Q3, Redfin said. Philadelphia had a decline of 8.2% and Nassau County, New York, had a decline of 2%.
“Luxury listings are skyrocketing because high-end homeowners have the financial means and the flexibility to move during this pandemic,” Fairweather said. “The growing supply of luxury homes for sale means that wealthy buyers have more options to choose from and a better chance of finding a home that checks all of their boxes. Meanwhile, buyers who are in search of more affordable homes are grappling with fewer choices and fierce competition.”