The luxury real estate market is thriving, with higher prices and more cash sales than ever before. Redfin reported a variety of interesting statistics from 2024’s first quarter that indicate the luxury market is looking up.
“People with the means to buy high-end homes are jumping in now because they feel confident prices will continue to rise,” said David Palmer, a Redfin agent in Seattle, where the median-priced luxury home sells for $2.7 million. “They’re ready to buy with more optimism and less apprehension.”
Redfin defines luxury homes as those within the top 5% of their metro area by value. Of those homes, nearly half were bought with cash in the last quarter, marking the highest share in at least a decade. This influx of cash is driving prices up with the median price of a luxury home soaring up 9% in the first quarter of 2024. That is nearly twice the increase seen in the broader real estate market. The average price of a luxury home hit a record $1,225,000 during the period.
The supply of luxury homes for sale has also been rising, and with more people opting to purchase with cash, high mortgage rates are of less concern. While the broader market experienced a 3% decline in supply during the quarter, luxury homes for sale went up by 13%. Redfin reported that the supply of luxury homes is still well beneath pre-pandemic levels, but the amount listed online jumped by 19% during the first quarter. “Prices continue to increase for high-end homes, so homeowners feel it’s a good time to cash in on their equity,” Palmer commented.
An interesting aspect of this trend is that the strongest areas of growth are not in locations known for luxury homes. The market with the fastest-growing luxury price was Providence, Rhode Island, which according to Redfin, saw prices go up by 16%.
Providence was followed by New Brunswick, New Jersey, where prices shot up 15%. New York City, usually a hot spot for luxury real estate, saw a price decline of 10%. Seattle, Washington saw the strongest growth of any metro area, with overall sales up 37%, and also claimed the fastest sale time with a median of nine days on the market. Austin, Texas followed closely behind on sales, with an increase of 26%. San Francisco also saw a strong sales increase of 24%, with Oakland and San Jose having some of the strongest days on market numbers.
Overall real estate numbers are falling, in contrast to the strong luxury home market. Redfin saw a fall of 4% in general real estate sales nationwide in the first quarter, but an increase of 2% in luxury home sales. The gap between the two markets has continued to grow in recent years and does not seem to be closing any time soon. Mortgage rates are now above 7% for a 30-year fixed loan, and those outside of the luxury sector often do not want to risk losing a lower rate by moving.
