With inflation, interest rates and mortgage rates rising, the housing market slowdown is in full swing — and rich Americans are fleeing the luxury housing market, according to a new report.
According to this, sales of luxury homes in the US fell by 17.8% compared to the previous year redfin, a real estate agency, for the three months ended April 30. In contrast, non-luxury real estate fell 5.4% over the same period, Redfin noted.
Luxury home sales fell the most in Nassau County, New York, down 45.3% year over year, followed by Oakland, California (a 35.1% drop) and Dallas, Texas (a 33.8% drop) ). Nassau County is part of Long Island with exclusive enclaves like Center Island and Sands Point.
The only increase in luxury home sales was in New York City. The median selling price for a luxury home was $4 million, according to Redfin’s data.
Overall, “the luxury market is cooling as rising interest rates, a sluggish stock market, inflation and economic security dampen demand,” according to the Redfin report.
“For a luxury buyer, a higher mortgage rate can mean a monthly housing bill that’s thousands of dollars more expensive,” she added.
The drop in sales is notable as it is the largest since the start of the COVID-19 pandemic. Redfin noted that there were only two other points in time with steeper declines: June 2020 and May 2020.
To put it bluntly, home prices are still high. The median selling price of luxury homes rose almost 20% year over year to $1.15 million in the three months ended April 30. But price growth is slowing: That number has declined from a peak growth of 27.5% in spring 2021.
In the meantime, care has improved in some areas. Luxury home listings increased the most in Warren, Michigan, up 32.2% year-on-year, followed by New York (31.1%) and San Antonio (22.8%).
Redfin categorizes luxury homes as those in the top 5% based on market value. Non-luxury real estate ranges between the 35th and 65th percentile, depending on market value. The massive drop in luxury home sales compared to non-luxury home sales could be due to estimates by some home buyers about the future direction of interest rates, an economist said.
“[W]Older buyers tend to be more financially savvy and have responded to the threat of rising mortgage rates by bringing forward a proposed purchase,” Matthew Pointon, senior real estate economist at Capital Economics, told MarketWatch.
“So those shoppers who would normally be buying now made that purchase earlier in the year and reduced sales today.”
Write to MarketWatch reporter Aarthi Swaminathan at email@example.com.
https://www.marketwatch.com/story/even-wealthy-buyers-are-feeling-the-heat-luxury-home-sales-plunge-by-nearly-18-the-biggest-drop-since-the-start-of-the-pandemic-11654882246?rss=1&siteid=rss Even wealthy buyers are feeling the heat, with luxury home sales plummeting nearly 18%