Luxury Home Sales Heat Up!
If you’re thinking about buying a luxury home in the future, you may want to consider moving up the date of your purchase. A significant recovery is underway in this sector of the housing market, which will likely lead to fewer homes to choose from and an increase in the price you will have to pay. Consider the following:
- According to researchers at Redfin, Sales of the priciest 1% of homes in the U.S. are up on average 21.1%, so far this year. That compares with an increase of 35% in 2013 for the top 1%, and contrasts with a 7% drop in home sales for the other 99% of the housing market.
- The average price for a home in the top 1% has varied widely this year, depending on the metro’s location. For example, in Raleigh-Durham the average price for the top 1% was only $800,000, and in Tampa, FL, the price was $900,000. In other markets prices were significantly higher for this group. Fort Lauderdale had an average price of $1.4 million. The average in West Palm Beach was $2.466 million, while Miami’s average price was $2,900,000. Not surprisingly, California’s metropolitan prices were among the highest in the nation. San Francisco and Los Angeles had the highest averages at $5.35 million and $3.65 million, respectively for homes sold in the top 1%.
- There was also a significant difference in prices paid within each Metropolitan area. For example, In Miami where prices for the top 1% averaged $2.9 million, prices in South Beach averaged $5.5 million. Fort Lauderdale had an average price of $1.4 million, yet Coral Ridge prices averaged $1.7 Million. Golden Isles average was $1.9 million and Harbor Beach prices averaged $3.036 million.
- It’s also interesting to note that 44.7% of homes were purchased for all cash, despite very low mortgage rates. Its likely many luxury buyers that could have paid cash were taking advantage of historically low mortgage interest rates, even though banks aren’t offering conventional financing in these price points.
Luxury home buyers should keep in mind that there is still room for additional appreciation, as prices in most luxury markets are still below their market highs recorded in 2006 and 2007. As inventory levels continue to drop, the selection of homes to choose from will become more limited, which typically leads to price appreciation. This is why many experts recommend taking advantage of the opportunity to get the best price and selection before this window of opportunity closes.