A median luxury home costs $825,000 in the U.S. — a slight increase from the same time period last year and an indication of recovery from the downturn brought on by the coronavirus pandemic, a new Redfin report has found.
The sale price of luxury homes, or homes worth more than 95 percent of the inventory in their respective market, rose 1.2 percent year-over-year during the three-month period of May to July. According to Redfin, the numbers of luxury homes on the market also fell 0.7 percent during the same time period — even amid a pandemic, when an inventory shortage is driving a rise in prices as people with money look to secure a home with more space and amenities such as pools and gyms.
“This pandemic-induced recession is unlike any past recession, and its effect on luxury housing is similarly incomparable,” Redfin chief economist Daryl Fairweather said in a prepared statement. “Now more than ever, homebuyers are seeking out features long associated with luxury homes, like spacious yards, home offices, gyms and private swimming pools. And that shift in buyer preferences means the luxury housing market isn’t suffering like it has in past recessions, when homebuyers mercilessly cut their budgets.”
By contrast, a median non-luxury home in the U.S. rose 6.3 percent to $275,250. The inventory drop was, at 14 percent, even steeper. Luxury home prices rose most dramatically in Miami, at 10.2 percent.
“Almost all of the luxury buyers I’m seeing in Miami today are from out of state — Los Angeles, New York City or Chicago,” Miami Redfin agent Maria Garcia-Gonzalez said in a prepared statement. “A lot of the snowbirds who used to commute between here and New York can no longer travel due to the pandemic, so they’ve just decided to stick around. Why spend $4 million on a tiny apartment in New York when you could get a beautiful mansion on the water here for the same price?”
While most major cities saw signs of a luxury market recovery, Anaheim, California, and Seattle saw luxury home prices drop 5.8 and 3.6 percent, respectively.
Several factors indicate that luxury sales are picking up across the country rather than just in specific cities. The number of luxury homes for sale on the market is down 1 percent, compared to 5 percent in the three-month period ending on May 31. Newly-listed homes are up 4.7 percent after plunging a record 16.2 percent in the last quarter while the number of luxury homes sold is down only 6.2 percent rather than the 16.4 of the preceding quarter.
“Homes over $1 million are sitting on the market for a bit longer, but prices are still holding strong and sellers aren’t offering discounts,” Maria Garcia-Gonzalez said.