SEATTLE–(BUSINESS WIRE)–Global economic volatility rocked the U.S. luxury housing market in the
first quarter of 2016, as the average sale price of luxury homes fell
1.1 percent compared to last year, according to Redfin (www.redfin.com),
the next-generation real estate brokerage. The price decline followed a
year of weakening luxury home price growth, but marks the first time
prices have gone negative since 2012.
Redfin defines the luxury market as the priciest 5 percent of homes sold
in a given quarter. Home prices for the bottom 95 percent of the market
maintained positive momentum, increasing 4.7 percent year over year.
The luxury home price decline was felt in cities across the country,
including: Miami Beach (-13.7%), Austin (-11.8%), Boston (-11.8%),
Houston (-5.1%), San Francisco (-4.7%), Washington (-4.2%), and Los
Angeles (-1.3%). With the exception of Miami Beach, prices in these
cities only fell at the high end, while the bottom 95 percent of the
market saw year-over-year price gains.
“Luxury buyers are out of step with the rest of the market because their
wealth is at stake,” said Redfin chief economist Nela Richardson.
“Instead of cheering rock-bottom mortgage rates, luxury buyers recoiled
from high-end spending in the face of volatile asset prices. Luxury
demand, especially for vacation and investment properties, has been more
fragile this year, causing prices to slump.”
Inventory of homes priced above $1 million increased 3.3 percent from a
year prior, with homes priced above $5 million up 13.2 percent. Luxury
home sales were up 6 percent compared to a year ago.
Not all cities experienced softness in the luxury market. In Oakland,
the price of a luxury home rose nearly 50 percent compared to a year ago
as the city has become a destination for high-end buyers looking beyond
San Francisco. Luxury homes also saw price gains in Irvine, California
(41.4%), Clearwater, Florida (31.2%), and Sarasota, Florida (27.3%).
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