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The typically hot homebuying season has kicked off, but this year’s market has been noticeably cooler. Still, luxury home values are holding their ground, and even growing despite financial uncertainty.
A new report from Zillow shows that luxury home values rose 2.7 percent over the past year, with the typical luxury home now valued at around $1.8 million. In some high-demand cities, such as New York, Los Angeles, San Diego and San Francisco, luxury homes are commanding more than double that price.
Orphe Divounguy | Zillow Senior Economist
“Despite a slower market, home prices have continued to climb,” Zillow Senior Economist Orphe Divounguy said in the report. “Luxury home values, in particular, have remained resilient, even as both buyers and sellers took a more cautious approach after the April stock market volatility.”
According to Divounguy, the luxury sector is often influenced by global economic conditions, and improving economic stability could add even more momentum.
There was a brief boost in early spring activity between February and March. Luxury homes under contract jumped by more than 30 percent during that period. But by April, that momentum waned, with just 12 percent of luxury homes going under contract compared to the previous month. New listings also dipped 5 percent.
Redfin attributes the pullback to shaky consumer confidence and shrinking investment portfolios. Luxury buyers are treading carefully, especially with mortgage rates still high and lingering concerns about inflation. But even with fewer deals closing, high-end homes continue to appreciate thanks to their scarcity and appeal.
Median luxury home values vary widely across the 50 largest U.S. metro areas, from around $835,000 in Buffalo, New York, to nearly $6 million in San Jose, California.
The Midwest is turning heads as one of the fastest-moving luxury markets in the country, with homes there getting snapped up faster than in most other places. Home value growth heated up the most annually in Cincinnati, Ohio (7.3 percent), Columbus, Ohio (6.8 percent), and Chicago (6.3 percent). On the flip side, Austin, Texas (-2.1 percent), Tampa, Florida (-1.7 percent), and Miami (-0.5 percent) are the only major metros where luxury home values declined.
