House on Rivo Alto Island in Miami Beach, Florida, US on Wednesday, February 1, 2023.
Eva Marie Uzcategui | Bloomberg | Getty Images
The US housing market is being hit hard by high mortgage rates, and sales of luxury homes are seeing the worst of it.
According to real estate brokerage Redfin, sales of luxury homes fell 45 per cent during the three months ended January 31 compared to the same period last year. redfin Defines luxury homes as those estimated to be in the top 5% based on estimated market value. Sales of non-luxury homes were down about 38% during that period.
Miami, which saw massive flooding rich buyer The initial days of the Covid pandemic saw a drop of around 69% in the sales of people migrating from the Northeast. It was followed by Nassau County—the Suffolk County area on New York’s Long Island, home to Hampton—down about 63%. something valuable california market Sales also saw a major drop as they also experienced a major pandemic sales slump.
while not all luxury buyer While mortgages are used, they are affected by the broader economy and the stock market in particular. Hence the volatility in the financial markets is having a huge impact on the luxury real estate market.
“The silver lining for luxury buyers who are still in the market is that competition is sparse, and jumbo loans often have lower mortgage rates than other loan types, as there is less risk that the higher-end Buyers will default on their mortgages,” Redfin Economics Research Lead Chen Zhao said in a release. “Wealthy house hunters are also often offered additional rate discounts for saving extra money from their banks.”
Falling demand is not just reducing competition. Supply is increasing. Inventories grew 7% year over year, the largest increase since 2015.
Yet supply is still historically tight – not much beyond the record low of 2022. New listings are also down 22%, indicating that supply is high because homes have been sitting for long periods of time.
The lack of supply has further pushed up the prices of luxury homes. The median price was up 9% to $1.09 million compared to the same period a year ago. Luxury prices reached an all-time high of 1.1 million in the spring of last year.