For the first time since 2012, sale prices decreased for the luxury housing market, defined as the top 5% of homes sold in a given quarter, according to a report by Redfin, a real estate brokerage.
Prices decreased by about 1.1% annually in the first quarter of 2016, according to the report. Although luxury home price growth weaken throughout 2015, this marked the first decrease in four years.
On the other hand, the report pointed out that home prices in the lower 95% continued making gains, increasing by 4.7% annually.
Some cities were his worse than others. Luxury homes sold in Miami Beach, for example, experienced a decrease of 13.7%, whereas in both Austin and Boston they deceased by 11.8%, by 5.1% in Houston, 4.7% in San Francisco, 4.2% in Washington and 1.3% in Los Angeles.
In each of these cities except Miami Beach, the lower 95% saw an increase in prices.
"Luxury buyers are out of step with the rest of the market because their wealth is at stake," Redfin chief economist Nela Richardson said. "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."
Of the homes priced about $1 million, inventory increased 3.3% from last year, and 13.2% with homes priced above $5 million. Luxury home sales increased by 6% annually.
Some cities went against the trend and experienced an increase in luxury home sale prices, according to the report. In Oakland, for instance, the price of one luxury home increased by almost 50% annually since the city has attracted high-end buyers expanding from San Francisco.
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(Source: Redfin)
