For about the last four years, home price growth in the overall market outpaced growth in the luxury sector every month. But since January 2024, that trend has reversed, Zillow reported.
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In a reverse course from trends over the last several years, nationwide luxury home value growth has outpaced home value growth in the market at large for the last five consecutive months, Zillow reported on Wednesday.
The typical luxury home in the U.S., or the top 5 percent of the market, is worth about $1.62 million, Zillow noted. Across the 50 largest metro areas in the country, luxury homes range in value from about $750,000 in Buffalo, New York, to $5.3 million in San Jose, California.
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Luxury home values are up 3.9 percent year over year compared to the overall market, where prices are up 3.2 percent year over year. From January 2019 to January 2024, home price growth in the overall market outpaced growth in the luxury sector every month. But since January 2024, that trend has reversed, and luxury home value growth has outpaced the general market.
Anushna Prakash | LinkedIn
“Luxury homes can be challenging to sell because the pool of buyers is so much smaller,” Anushna Prakash, economic research scientist at Zillow, said in the company’s report.
“That’s one reason prices for them usually grow more slowly. We’re seeing a different trend play out this year. Luxury homebuyers are likely less affected by higher mortgage rates than a typical buyer, especially repeat buyers who saw their home equity soar over recent years. Many will be able to pay with cash and skip a mortgage payment altogether.”
Luxury home prices have continued to climb, in part because inventory has been more sluggish in recovering than in the overall market. Luxury inventory is up 15.7 percent year over year, but still down 46.9 percent below pre-pandemic levels. Meanwhile, total inventory is up 22.7 percent year over year and about 32.6 percent below pre-pandemic levels.
Luxury homes that receive price cuts are also growing, but trending below price cuts in the general market, Zillow added. About 21 percent of luxury listings received a price cut in June, up from 19.4 percent the year before. In the overall market, 24.5 percent of listings saw a price cut in June.
Richmond, Virginia, has seen the most price growth in the last year, with home values up 16.5 percent from last year. Hartford, Connecticut, saw the second-largest spike in prices year over year, with home prices up 8.6 percent.
Only six major U.S. markets have fewer luxury properties for sale than last year, including Richmond, where inventory is down 13.2 percent year over year. Luxury homes in Richmond also sold the most quickly out of any market in the U.S. in June, with properties selling in six days.
Only one major market in the country saw luxury home values drop in the last year: Austin, Texas. Still, luxury values were only down 1.5 percent in the market year over year. The Texas capital saw home values surge during the pandemic. The resulting building boom that arrived to meet demand has helped soften price growth in the area.
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