Back In March

In March 2023, Redfin shared some intriguing data. The top 5% of sales (price wise), had taken a 45% tumble year over year. However, the data, which was collected over three months, also showed that the ultra-luxury market across the U.S. appreciated 9% in that same time. The media headlines focused on the 45% drop though (see below).

• Top 5% of sales down 45% YoY.
• Data collected over three months, ending January 2023.
• Ultra-luxury market prices up 9% across the U.S.

So, what’s the deal? If prices are on the up, why the fuss over a sales drop?

• Media focused on sales slowdown, not price increase.
• Rising prices matter, even if sales have dropped.

We’ve sifted through the Redfin data and the media coverage. We’ve made some deductions. And we’re here to share them with you.

Also Read: A Year-Over-Year Look At Market Indicators: A Tale Of Change

While Luxury Home Prices Rose 9% YoY, The Headlines Focused On 45% Sales Drop

Luxury Home Sales: The Numbers

• U.S. luxury home sales have dipped by 44.6%.
• This is the second-lowest level on record.
• Luxury sales grew faster during the pandemic, hence the sharper fall.

The post-pandemic market was a unique time in history. Now, we’re seeing a shift back to more familiar territory.

Economic Factors: A Closer Look

• Mortgage rates are up, making home buying pricier.
• Jumbo rate mortgage, however, has a lower interest rate.
• Stock market turbulence in 2023 has made luxury home buyers cautious.

These factors have stirred the pot, creating unique opportunities. Lower competition and lower interest rates for jumbo loans could be a win for luxury buyers.

Also Read: U.S. Housing Market Update: Heading Into Summer Of 2023

Per Redfin, Ultra Luxury Sales Dipped 45% Yet Gained 9% Appreciation YoY

Geographic Spread: A Mixed Bag

• High-end sales drop is focused on the east coast and California.
• Miami’s luxury home sales have dipped by 68.7% year over year.
• New taxes are pushing luxury home buyers to explore other cities.
• Markets like Kansas City, Cleveland, Pittsburgh, St Louis, and Dallas have seen a less severe decline.

Local market conditions are key. As an example, we recently pointed out 26 Notable Closing In Paradise Valley

The Upside: Value & Supply

• Luxury home sales prices have risen by 9% year over year.
• Luxury homes for sale have increased by 7.1% year over year.
• Non-luxury homes for sale have fallen 5.5% year over year.

Stay In The Loop

Real estate is complex and ever-changing. Despite a HUGE dip in sales, per the media and Redfin, the U.S. luxury market appreciated 9%. And while their headlines hyped the 45% drop, they had no choice but to include the 9% rise in home prices year over year. And while we’re not here to beat the media up too much, we are here to show you how they tell the story THEY want to tell. Yes, we care about trends. Yes, we aim to save our clients money.

Due to the reasons above, we think the fact luxury homes cost more today than when the 2022 correction began is important to report. We’ll continue to keep a close eye on the trends and bring you the most relevant updates. Stay tuned to our LUXE BLOG for more. WLH out.