In the third quarter of 2019, luxury home prices increased 0.3% year over year, marking the first time in nearly a year that luxury prices did not fall.
Previously, luxury home prices saw three consecutive quarters of declines, according to data from Redfin.
Redfin classifies luxury homes as those that sold among the top 5% most expensive in the quarter. In the third quarter, luxury home prices across the country averaged $1.6 million.
However, in the other 95% of the market, Redfin indicates home prices rose 3.6% year over year, averaging $319,000 in the third quarter.
According to the company, sales of homes priced at or above $1.5 million increased by 3.2% in the third quarter. This increase comes after three consecutive quarters of declines in the luxury sector, including a 12% annual drop in the first quarter of the year.
Daryl Fairweather, Redfin’s chief economist, said despite economic uncertainty, recession fears weren’t enough to scare off wealthy homebuyers this quarter.
“The U.S. economy grew faster than expected in the third quarter, partly as a result of healthy consumer spending,” Fairweather said. “Those results, along with flat luxury home prices and rising sales, go to show that Americans are basing their spending habits on their own personal financial situation rather than concerns about global economic tensions. For many, that means strong incomes and good employment prospects.”
Redfin’s analysis revealed the supply of homes for sale priced at or above $1.5 million grew 9.3% year over year, rising for the sixth quarter in a row.
The increase in luxury supply was largely attributed to growth in the number of high-priced homes hitting the market.
During Q3, new listings priced at or above $1.5 million rose by 6% year over year, while new listings of homes priced below $1.5 million dropped by 4%.
The report indicates that cities in Florida experienced the largest increases in luxury home prices in the third quarter.
“Homebuyers can get a lot more for their money in West Palm Beach than in more expensive places like Miami and Palm Beach Island,” Redfin agent Elena Glatko said. “And I’ve noticed that both luxury buyers and sellers feel that real estate is one of the assets least susceptible to economic changes. They believe that over time, luxury real estate is a better investment than the stock market.”
Here are the top five areas that saw the largest increase in luxury home prices:
- West Palm Beach, Florida increased 128.3%
- Clearwater, Florida increased 49.3%
- Delray Beach, Florida increased 47.3%
- Paradise, Nevada increased 19.8%
- Raleigh, North Carolina increased 19.3%
NOTE: This report is based on multiple-listing and county recorder sales data in markets served by Redfin. For inventory and sales, Redfin analyzed homes priced at or above $1.5 million that were sold in the third quarter of 2018.
