Three watchwords in the nation’s luxury markets…more inventory shortages, more sales and higher prices. Let’s agree on terminology…Redfin defines luxury markets as the top 5% of the most expensive homes sold in a city every quarter.
First, let’s compare the 5% luxury market and the 95% non-luxury market in Q3, 2017
The average price within the 5% luxury market in Q3 was $1.7M. The average price within the 95% non-luxury market was $336,000.
Q3 Summary Top 5% Bottom 95%
Aver. Sale Price $1.71M $336,000
Aver. Sale Price YoY +4.9% +5.3%
Aver. Sale Price QoQ -4.2% 0%
Days on Market 70 53
Days on Market YoY 4 fewer 7 fewer
% Sold Above List Price 1.5% 24.2%
Longmont, CO led the nation in terms of the strongest year over year price growth in the luxury segment of the market. The average sales price of luxury homes in Longmont was $1.55M, an average price increase of 34.7%. Fort Lauderdale and St. Petersburg in Florida came in behind Longmont with an increase of +28.7% and +19.6% in average sale price of luxury homes respectively.
Nela Richardson, chief economist at Redfin, said, “There is a strong buyer demand for high end homes…luxury sales soared in Q3. Sales of homes priced at or above $1M were up 11% from a year ago while sales priced at or above $5M were up almost 10%.”
Luxury sale prices fell the most in Delray Beach, Florida with a decrease of -26.9%. San Francisco luxury sale prices fell by 14.7%. Boca Raton, again in Florida, fell behind San Francisco in terms of declining luxury sale prices with a decrease of -13.8%. (Notice how local real estate prices are…top increases and decreases are in the same state.)
Now let’s take a look at luxury inventory shortages…
The number of homes for sale priced at or above $1M fell by 18.1% in Q3, 2017. This percentage drop marks the second consecutive quarter drop in the number of luxury homes for sale.
The number of homes for sale priced at or above $5M declined by -19%. This drop in the number of luxury homes for sale is the first quarter in which luxury inventory fell year over year since 2014 when Redfin began reporting on luxury home markets.