Luxury Home Sales in U.S. Continue to Rise
December 09 2016 - 9:38AM
Dow Jones News
By Chris Kirkham
Sales of luxury homes in most parts of the U.S. have continued
to increase over the last year, according to an analysis of more
than 40 high-end counties in 16 states, despite concerns from some
analysts about a slowdown.
The study, by research firm John Burns Real Estate Consulting,
showed that the number of homes priced above $600,000 grew in 37
out of 43 counties analyzed and that sales above that threshold in
the last 12 months increased by more than 10% over the previous
year.
"There's been this notion that luxury is in a recession," said
John Burns, the group's chief executive. "What's slowing and
getting a lot of headlines are the $5 million homes and the $8
million homes." For homes priced below those ultraluxury levels but
still far above median prices, demand has remained strong, he
said.
The data show that growth might have slowed as the year has
progressed. While sales over $600,000 increased by 10% across all
43 markets when examining the last 12 months, the growth rate was
5% when looking at sales in the third quarter of this year compared
with the same period in 2015.
Still, sales for the third quarter increased year-over-year for
homes in every price range up the scale. Sales of homes between $1
million and $1.1 million grew by 4%, those between $1.1 million and
$1.2 million grew by 10% and those $1.5 million and above edged 1%
higher.
What constitutes luxury, of course, isn't the same in every
market.
Homes above $600,000 would be considered high-end in Fulton
County, Ga., where the median price is about $228,000. But in San
Francisco, median home prices are above $1 million.
For the most expensive markets, the results were mixed. Sales of
homes above $1.5 million in Alameda County, Calif., home to
Oakland, grew by 20% in the third quarter, and sales in that price
range grew by 30% in Brooklyn, N.Y., over the same period.
But sales above $1.5 million in Manhattan fell by 10% in the
third quarter compared with a year earlier, and sales in Santa
Clara County, Calif. -- home to Silicon Valley -- fell by 11% in
that time frame. The analysis, using CoreLogic data, focused on
large markets where new home construction is high.
Mr. Burns attributed some of the slowdown in luxury homes in
Manhattan and Miami to a decrease in foreign-buyer sales after the
Treasury Department required more disclosure of buyers' names in
all-cash property transactions involving limited liability
companies. The initiative started in Manhattan and Miami in January
and expanded over the summer to other markets, including parts of
coastal California, the rest of New York City, counties near Miami
and San Antonio.
In less pricey markets around the country, however, higher-end
sales have remained strong. In Denver, sales above $600,000
increased by 32% overall in the third quarter, and sales above
$600,000 in El Dorado County, Calif., outside Sacramento, grew by
31% for the same period.
The trend was on display this week when luxury national home
builder Toll Brothers Inc. again reported double-digit revenue
growth and projected a rosy 2017 despite analysts' concerns about a
high-end slowdown.
"While there has been some debate about softness in the luxury
housing market, we continue to produce impressive results by
serving what we believe is a demographic sweet spot in the luxury
market," Toll Brothers' Chief Executive Douglas Yearley said on an
earnings call, noting the company has an average sales price of
about $690,000 in markets outside of California and New York. "Our
product lines are affordable to many households in the U.S."
Write to Chris Kirkham at chris.kirkham@wsj.com
(END) Dow Jones Newswires
December 09, 2016 09:23 ET (14:23 GMT)
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