With home price growth outpacing the overall housing market, it appears that luxury homes are bouncing back as homebuyers returned to the market in full force in May.
According to realtor.com’s Luxury Housing Report released on Thursday, the luxury market actually outpaced the rest of the housing market in both price growth and views.
Luxury home sellers re-entered the market with new listings for homes priced above $1 million, down just 15.1% year over year in May, compared to 57.8% in April. This means that luxury home new listings were still down, but to a lesser degree than the month prior.
But, like the rest of the market, inadequate inventory is the biggest challenge for these homebuyers.
“The COVID-19 pandemic has reinforced the resilience of the housing market and unlike prior downturns, the luxury market is leading the recovery,” said realtor.com’s Chief Economist, Danielle Hale.
“Stay at home orders and social distancing have put a new value on the extra space,” Hale continued. “We’re seeing this in the luxury market as well, which could mean there is renewed interest from high-end buyers to find a second-home that is within driving distance from their primary residence.”
Since January, only 25 of the 94 luxury markets tracked by realtor.com showed listing price growth. In addition, the results of the pandemic have slowed price growth in the luxury market, which was up 15% at the beginning of the year.
According to Zillow, new listings of higher-end homes have been down 46%, while the less expensive homes are down only 32%.
In response to the pandemic, new listings of the most expensive homes were the first to tumble below 2019 levels, while cheaper listings fell over a week later.
Despite a small pace of growth, luxury listing price entry points reached $2.97 million in May, realtor.com said. This is up 0.5% from April and 6.1% year over year.
Like Hale said, it’s the luxury market that led the housing market’s median price growth, which was up 1.6% in May year over year.
After falling 9.5% year over year in April, searches for million-dollar homes grew 7.3% year over year. This topped the 6.2% growth that we saw before the pandemic slowed things down.
Not only are luxury listings seeing more viewers, but popular second-home markets are seeing the love, too.
Suffolk County, New York, where The Hamptons is located; Palm Springs in Riverside County, California; and Greenwich in Fairfield County, Connecticut all ranked in the top five markets with the largest increase in listing view growth in May, realtor.com said. These views accelerated by 56%, 28% and 24%, respectively, compared to January’s trends.
In New York, where COVID-19 has remained a constant hotspot, luxury homebuyers are gravitating outwards.
Union, Bergen and Somerset counties in New Jersey saw views increase by 40%, 30% and 28% year over year in May, respectively. Views per property in these counties increased by 10% to 21% prior to COVID-19.
Meanwhile, Manhattan, Brooklyn and Queens all saw luxury prices remain steady in May compared to a year ago.