Luxury home prices, the top 5% of the most expensive homes available to buy on the market, dropped to an average of $1.55M, a drop of -1.6% y/y, according to Redfin. The remainder of the homes listed for sale, or 95% of the housing market, experienced a price increase of +2.7% y/y. The average home price is now $300,000, again according to Redfin.
Home sales volume of homes priced at or above $2M fell -16% during Q1 2019. Meanwhile, the supply of luxury homes grew by +14%. Q1 2019 represented the fourth consecutive quarter of luxury home inventory growth.
Daryl Fairweather, the chief economist with Redfin, pointed his finger at changes in the 2017 Tax Law as the culprit for declining sales in the luxury end of the market. “Not only do the new rules make it less desirable to purchase a multi million dollar home in higher-tax states, (the 2017 Tax Law) has also motivated some people – especially those with big incomes and big hosing budgets – to consider moving to places like Florida, Washington or Nevada which have no state income tax.”
Even in such a nation-wide trend of lower sales and prices of luxury homes, some cities, considered outliers by many, are seeing luxury home prices rise. Such outliers that saw luxury home prices rise in Q1 2019 included:
- West Palm Beach FL – +89.6%
- Petersburg FL – + 62.3%
- Charleston SC – +42.3%
- Tacoma WA – +33.1%
- Fort Lauderdale FL – +27.8%
Though luxury home sales and prices decreased across most of the country, luxury homes sold faster during Q1 2019. Days on the market were 69, 3 fewer days than the same time last year. DOM data for non-luxury homes were also less than last year, 69 DOM or 10 fewer days.
According to Trulia, “Even as the housing market shows signs of cooling and evidence that prices may be exhausting demand, the fact remains that home price growth (at all price points) still outpaces wage growth. There is a long way to go before many of those working in our communities are no longer worried about bring able to afford to live where they work.