Luxury home prices have lost steam says Redfin

Growth in Q3 was lowest in nearly 2 years

Luxury home prices have lost steam says Redfin

The average price of luxury homes in the US saw its weakest growth in almost two years in the third quarter of 2018.

An analysis by Redfin found growth for the top 5% most expensive homes sold in the quarter of 3.2% year-over-year to an average $1.7 million; although this is still way above the 1.1% growth of Q4 2016.

For the other 95% of homes sold, growth in Q3 2018 was 3.6% year-over-year (to $343,000), down from the 5.1% growth rate of the previous quarter.

"A great deal of the slowing price growth among luxury homes can be explained by the stock market, a strong indicator of luxury homebuyers' wealth, or at least their perceived wealth," said Redfin chief economist Daryl Fairweather. "The stock-market fluctuations that began last quarter likely caused some uncertainty among wealthy individuals, which has made luxury buyers more sensitive to price. The swings many people have been watching in their stock portfolios have only grown more frequent in recent weeks, so we expect this trend of slowing luxury home price growth to continue at least into the end of the year."

Cities in Florida and Nevada saw some of the nation's largest increases in luxury home prices in the third quarter. In West Palm Beach, Florida, the average sale price for a luxury home shot up 54.5% over last year to $1.7 million. Luxury home prices were up 29.6% in Reno, Nevada, 26.0% in Boca Raton, Florida, and 22.5% in Miami.

Selling faster
Luxury homes were selling faster in the third quarter than a year earlier with an average 65 days on market, down from 73. That’s the same as in the previous quarter and the fastest pace since Redfin began tracking the metric in 2009.

Non-luxury homes also sold faster than the same period of last year with 49 days on the market compared to 58 in Q3 2017.

“We have seen homes go under contract faster every year since 2015. Buyers are able to look at more homes more quickly in part thanks to real estate technology," said Fairweather. "For example, a potential home buyer can use Redfin's website to go on virtual tours, or immediately book a home tour using Redfin's book-it-now feature."