Prices for luxury homes in the United States have reached a record high, rising nearly nine percent in the first quarter of 2024, twice as much as the prices of non-luxury homes.
A report from Redfin discovered that the median price of a luxury home in the U.S. was roughly $1,225,000 during the first quarter of the year, signifying an 8.7 percent increase from a year ago. Meanwhile, the median price for non-luxury homes was roughly $345,000, a 4.6 percent increase from a year ago.
Redfin’s report classified luxury homes as “estimated to be in the top” five percent of their “respective metro area based on market value.” Non-luxury homes however were defined as homes “estimated to be in the 35th and 65th percentile based on market value.”
In addition to prices for luxury homes increasing, sales of luxury homes increased by 2.1 percent year-over-year, while there was a 4.2 percent decrease in the sales of non-luxury homes.
The report found that sales of luxury homes were “outperforming” sales for non-luxury homes because “many luxury buyers” do not view higher mortgage rates as being a “deterrent,” noting that 47 percent of luxury homes had been bought with cash at the beginning of 2024.
“People with the means to buy high-end homes are jumping in now because they feel confident prices will continue to rise,” David Palmer, a Redfin Premier agent in Seattle, Washington, explained. “They’re ready to buy with more optimism and less apprehension. It’s a similar sentiment on the selling side: Prices continue to increase for high-end homes, so homeowners feel it’s a good time to cash in on their equity. Even though mortgage rates remain elevated and demand isn’t as high as it was during the pandemic, many homebuyers and sellers feel the worst of the housing downturn is behind us.”
The report also found:
Luxury prices are rising largely because demand for high-end homes has held up better than demand for middle-of-the-road homes. Sales of luxury homes are on the upswing, partly because many high-end buyers are undeterred by high mortgage rates, with the share of luxury homes bought in cash sitting at record highs. New listings of luxury homes are soaring – but not enough to curb the price growth that comes with rising demand; the total supply of luxury homes is still far below pre-pandemic levels.
Compared to a year ago during the first quarter of the year, the report found that there were more luxury homes available on the real estate market, rising 12.6 percent. Meanwhile, the number of non-luxury homes for sale decreased 2.9 percent over the same period.
Providence, RI, Virginia Beach, VA, and New Brunswick, NJ, were discovered to have had the largest increase in the median sale price of luxury homes.
In Providence, there was a 16.2 percent increase to a median price of $1,400,000 for a luxury home, while New Brunswick’s median price for a luxury home rose 15 percent to $1,900,000. Virginia Beach saw a 12.8 percent increase in the median price for a luxury home to $1,100,000.
Areas such as New York City and Austin, Texas, saw decreases in their median sale prices. New York City saw a 9.9 percent decrease to $3,250,000, while Austin saw a 6.9 percent decrease in median sale prices to $1,629,300.
