Luxury Home Prices Spike 9% to All-Time High

Rhea-AI Summary

Redfin reports a significant surge in luxury home prices, reaching a record $1,180,000 in Q2 2024, up 8.8% year-over-year. This growth outpaces non-luxury homes, which increased by 3.8% to $342,500. The luxury market has shown resilience despite high mortgage rates, largely due to all-cash buyers (43.7% of luxury home purchases).

Luxury home sales remained stable with a 0.2% increase, while non-luxury sales dropped 3.4%. Luxury inventory rose 9.7%, marking the fourth consecutive quarter of growth. However, both luxury and non-luxury homes are taking longer to sell, with median days on market increasing to 40 and 31 days, respectively.

Regionally, Providence, RI saw the highest luxury price increase (16.5%), while Nashville, TN experienced the largest sales growth (20.4%). The most expensive U.S. home sale in Q2 was in Glenwood Springs, CO (Aspen) for $77 million.

Positive

• Luxury home prices increased by 8.8% to a record $1,180,000
• Luxury home sales grew 0.2%, outperforming non-luxury sales which fell 3.4%
• Luxury inventory rose 9.7%, indicating increased market activity
• All-cash purchases for luxury homes increased to 43.7%
• New listings of luxury homes increased by 11%

Negative

• Luxury homes are taking longer to sell, with median days on market increasing to 40 days
• Luxury home prices decreased in New York (-3.2%) and Austin (-1.5%)
• Luxury home sales decreased significantly in some metros, like Newark (-20.1%) and Baltimore (-15.5%)

Insights

Real Estate Analyst

The luxury home market's resilience amid high mortgage rates is a fascinating development. The 8.8% year-over-year price increase for luxury homes, compared to just 3.8% for non-luxury homes, underscores a significant divergence in market dynamics. This trend is likely driven by several factors:

• Cash purchases: 43.7% of luxury home sales were all-cash, slightly up from last year. This insulates high-end buyers from interest rate fluctuations.
• Stock market performance: The strong equities market has bolstered the purchasing power of affluent buyers.
• Home equity: Existing homeowners have benefited from appreciation, facilitating moves to higher-end properties.

The stability in luxury home sales (0.2% increase) contrasts sharply with the 3.4% decline in non-luxury sales. This resilience, coupled with increasing inventory (9.7% year-over-year growth), suggests a rebalancing market that may moderate future price growth. The regional variations, particularly the strong performance in Providence, San Jose and Nassau County, highlight the importance of local market conditions in luxury real estate trends.

Financial Analyst

The luxury home market's performance offers intriguing insights into wealth distribution and economic trends. The record $1,180,000 median price for luxury homes represents more than just real estate appreciation; it's a barometer for high-net-worth individuals' financial health and confidence.

Key financial implications include:

• Wealth effect: Rising luxury home prices can boost consumer spending among affluent households, potentially supporting high-end retail and services.
• Investment patterns: The preference for real estate over other asset classes suggests a desire for tangible assets in an uncertain economic environment.
• Market segmentation: The growing gap between luxury and non-luxury home price growth (8.8% vs 3.8%) may indicate increasing wealth inequality.

The 11% increase in new luxury listings compared to just 2.6% for non-luxury homes could signal that some wealthy homeowners are capitalizing on high prices. This influx of inventory might temper future price growth but also presents opportunities for buyers in the luxury segment.

Market Strategist

The luxury home market's performance offers valuable insights for investors and market watchers. The divergence between luxury and non-luxury segments highlights a 'K-shaped' recovery in the housing market, mirroring broader economic trends.

Strategic considerations:

• Regional opportunities: Markets like Providence (RI), San Jose (CA) and Nassau County (NY) showing strong price growth may present attractive investment prospects.
• Market timing: With luxury homes taking longer to sell (median 40 days, up 2 days YoY), buyers may find increased negotiating power.
• Supply dynamics: The 9.7% increase in luxury inventory suggests a market shift, potentially leading to more balanced conditions and moderating price growth.

The concentration of ultra-luxury sales in areas like Aspen, Miami Beach and Palm Beach underscores the importance of location in high-end real estate. Investors should monitor these trophy markets as bellwethers for broader luxury trends. The resilience of the luxury segment, despite economic headwinds, suggests that high-net-worth individuals remain confident in real estate as a store of value and lifestyle investment.

Redfin reports that luxury home prices grew more than twice as fast as non-luxury homes in the second quarter

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — The typical U.S. luxury home sold for a record $1,180,000 in the second quarter, up 8.8% from a year earlier—the biggest increase in nearly two years. Non-luxury home prices grew at less than half that pace, rising 3.8% to a record high median of $342,500, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.

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.

“The luxury market has withstood the havoc wreaked by high mortgage rates this year, thanks to an abundance of all-cash buyers,” said Redfin Senior Economist Sheharyar Bokhari. “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.”

High-end buyers were less likely to be impacted by the rate lock-in effect and uncertainty around the direction of mortgage rates, which sat 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. (Note the all-cash data covers the three months ending in May, the most recent month for which all-cash data is available).

Luxury home sales stay positive as non-luxury sales fall

The number of luxury homes sold in the second quarter was virtually unchanged from a year earlier, ticking up by 0.2%, marking the third consecutive quarter of sales growth. Non-luxury home sales fell 3.4% to the lowest second-quarter number in a decade.

“There is still strong demand for well-priced, high-end properties, especially those which are presented beautifully and move-in ready,” said Crystal Zschirnt, a Redfin Premier agent in Fort Worth, TX, where luxury home sales were up 9.7% year on year and typically sold four days faster than non-luxury homes. “We had a client recently list a property for $2.4 million that we ended up selling for $2.6 million. We are still seeing multiple offers in situations where a property is priced accurately, visually appealing and doesn’t need any work.”

Even though the overall market is seeing far less activity than it did pre-pandemic—in large part due to an ongoing supply shortage—the luxury market has made up more ground since. Compared to the second quarter of 2019, luxury sales were down 12.8%, while non-luxury sales were down 20.1%.

Luxury home inventory grows to highest level in 3 years

Luxury inventory rose 9.7% year over year, the fourth consecutive quarter of growth following a major drop off during and after the pandemic. Non-luxury inventory rose 3.9%. It’s worth noting inventory in both categories is still well below pre-pandemic levels.

The number of new listings of luxury homes increased 11%, far outpacing the 2.6% increase in new listings of non-luxury homes.

Luxury and non-luxury homes sitting longer on market

With inventory increasing, luxury homes stayed on the market a median 40 days—two days longer than a year earlier. Non-luxury homes also took longer to sell—a median 31 days—up from 28 days last year.

“We are seeing luxury homes selling within 30-45 days, but that’s a lot longer than in 2022 when they were flying off the shelf,” said Juan Castro, a Redfin Premier agent in Orlando, FL, where inventory ballooned 22.7% in the second quarter, year over year. “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.”

Metro-Level Luxury Highlights: Q2 2024

Redfin’s metro-level luxury data includes the 50 most populous U.S. metros. Some metros are removed from time to time, to ensure data accuracy. All changes noted below are year-over-year changes.

• Prices: The median sale price of luxury homes rose most in Providence, RI (16.5% increase to $1,395,000), San Jose, CA (16.4% increase to $4,830,000) and Nassau County, NY (14.3% increase to $2,572,500). It fell in just two metros, in New York (-3.2% to $3,200,000) and Austin, TX (-1.5% to $1,650,000).
• Sales: Luxury home sales increased most in Nashville, TN, (20.4%), Tampa, FL (14.3%) and Seattle (13.9%). They decreased most in Newark, NJ (-20.1%), Baltimore, MD (-15.5%) and Indianapolis, IN (-12.4%).
• Active listings: The total number of luxury homes for sale increased most in Tampa, FL (29.6%), Jacksonville, FL (28.9%) and San Antonio, TX (26.6%). Total inventory fell the most in Newark, NJ (-16%), Chicago (-9.8%) and Atlanta (-6.2%).
• New listings: New listings of luxury homes increased most in Providence, RI (31.5%), Miami (28.1%) and Tampa, FL (27.6%). New listings fell in 11 metros, with the biggest declines in Newark, NJ (-18.3%), San Francisco (-15.4%) and Chicago (-8.9%).
• Speed of sales: Luxury homes sold fastest in Seattle with a median of six days, while Detroit, San Jose, CA and Indianapolis, IN all recorded a median of 10 days. They sold slowest in Miami (114 days), West Palm Beach, FL (108) and Nassau County, NY (81).

10 Most Expensive U.S. Home Sales: Q2 2024

1. Glenwood Springs, CO (Aspen): $77M
2. Glenwood Springs, CO (Aspen): $66.5M
3. Los Angeles, CA: $62.8M
4. Miami, FL (Miami Beach): $62.5M
5. Glenwood Springs, CO (Aspen): $59M
6. West Palm Beach, FL (Palm Beach): $51.3M
7. West Palm Beach, FL (Highland Beach) $50M
8. West Palm Beach, FL (Palm Beach): $49.6M
9. Glenwood Springs, CO (Aspen): $48.8M
10. Glenwood Springs, CO (Woody Creek): $46M

To view the full report, including charts, methodology and additional metro data, please visit: https://www.redfin.com/news/q2-2024-luxury-report

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We run the country's #1 real estate brokerage site. Our customers can save thousands in fees while working with a top agent. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can have our renovations crew fix it up to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1.6 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 4,000 people.

Redfin’s subsidiaries and affiliated brands include: Bay Equity Home Loans®, Rent.™, Apartment Guide®, Title Forward® and WalkScore®.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240725206013/en/

Redfin Journalist Services:

Angela Cherry

press@redfin.com

Source: Redfin

FAQ

What was the average price of a luxury home in Q2 2024 according to Redfin (RDFN)?

According to Redfin (RDFN), the typical U.S. luxury home sold for a record $1,180,000 in the second quarter of 2024.

How did luxury home sales compare to non-luxury home sales in Q2 2024 for Redfin (RDFN)?

Redfin (RDFN) reported that luxury home sales increased by 0.2% year-over-year in Q2 2024, while non-luxury home sales fell by 3.4%.

What percentage of luxury homes were purchased with all cash in Q2 2024, as reported by Redfin (RDFN)?

Redfin (RDFN) reported that 43.7% of luxury homes sold in Q2 2024 were purchased with all cash, up from 43.2% a year earlier.

Which city saw the highest increase in luxury home prices in Q2 2024, according to Redfin (RDFN)?

According to Redfin (RDFN), Providence, RI saw the highest increase in luxury home prices, with a 16.5% rise to $1,395,000 in Q2 2024.

What was the most expensive U.S. home sale in Q2 2024, as reported by Redfin (RDFN)?

Redfin (RDFN) reported that the most expensive U.S. home sale in Q2 2024 was in Glenwood Springs, CO (Aspen) for $77 million.