SEATTLE, Oct. 13, 2020 /PRNewswire/ -- (NASDAQ:
RDFN) -- U.S. luxury home sales increased 41.5% year over year
in the third quarter, according to a new report from Redfin
(www.redfin.com), the technology-powered real estate brokerage.
That's the largest jump since at least 2013, when Redfin began
recording this data. Meanwhile, sales of medium-priced homes
climbed just 3%, and sales of affordable homes declined 4.2%,
underscoring the coronavirus pandemic's disparate impact on
Americans with lower levels of wealth.
"The luxury housing market normally takes a hit during
recessions as wealthy Americans tighten their purse strings, but
this isn't a normal recession," said Redfin chief economist
Daryl Fairweather. "Remote work,
record-low mortgage rates and strong stock prices during the
pandemic are allowing America's wealthy families to gobble up
expensive houses with home offices and big backyards in the
suburbs. Meanwhile, scores of lower- and middle-class Americans
have lost their jobs or are still renting in the city because
they're essential workers and have to commute into work, so they're
unable to reap the benefits of homeownership."
A handful of West Coast metro areas fueled the surge in luxury
home sales during the third quarter. In Sacramento, luxury sales soared 86.1% from a
year earlier, more than any other major metro. Rounding out the top
three were two other California
metros—Riverside, CA and Oakland,
CA, up 62.8% and 60.9%, respectively. Portland, OR (+60.6%) and West Palm Beach, FL (+59.7%) also saw sizable
gains.
"It's well known in the real estate world that luxury properties
typically take longer to sell, but this may be starting to change,"
said Redfin Sacramento agent Kelly
Crocker. "Sacramento has
always been a popular landing place for transplants from crowded
cities, but now with the pandemic and record-low mortgage rates,
it's becoming an even bigger hotspot for people who have the means
to move. We're seeing a lot of tech workers sell their expensive
Silicon Valley homes and come out here in search of more space and
more bang for their buck. A number of my buyers have been eyeing
the Sacramento suburbs for a
while, but are just now pulling the trigger because rates are low
and they no longer need to commute into work."
The Sacramento metro was the
most popular destination for homebuyers looking to relocate in July
and August, according to an analysis of Redfin.com users.
San Francisco was the top origin
of out-of-area buyers looking in the Sacramento area.
Luxury home sales declined in just two of the 49 most populous
U.S. metros—Philadelphia (-8.2%) and Nassau County, NY (-2%).
"Philadelphia is seeing more
luxury sellers than buyers right now because luxury homeowners are
fleeing the city during the pandemic," said Redfin Philadelphia
agent Blakely Minton. "Why spend
$1 million on a high-end home in the
city when you can get a larger house with land in the Philadelphia suburbs for a more affordable
price?"
High-End Home Prices Are Growing Faster Than Affordable-Home
Prices
Over the past five years, growth in prices of
America's most affordable homes has consistently outpaced growth in
prices of America's most expensive homes. That is no longer the
case.
Luxury home prices increased 6.5% year over year in the third
quarter, while prices in the expensive tier rose 7.2%—both
outpacing the 2.9% growth in prices of the country's most
affordable homes.
"Prices of the most affordable homes are experiencing relatively
slow growth because the families who typically buy these homes have
been hit especially hard by the pandemic," Fairweather said. "So
long as the coronavirus keeps people out of work and the government
doesn't provide more stimulus, the owners of America's most
affordable homes will continue to see relatively low property value
growth because the folks who would normally make offers on their
homes will consider it more financially prudent to continue renting
instead."
The Supply of Luxury Homes Is Growing
The number of
luxury homes for sale increased 8.4% year over year in the third
quarter, while the supply of homes in all other price tiers
declined.
Luxury housing supply is growing because new listings in this
segment of the market are surging. New listings of luxury homes
soared 44.9% year over year in the third quarter, while new
listings in the bottom three tiers grew less than 5%.
"Luxury listings are skyrocketing because high-end homeowners
have the financial means and the flexibility to move during this
pandemic," Fairweather said. "The growing supply of luxury homes
for sale means that wealthy buyers have more options to choose from
and a better chance of finding a home that checks all of their
boxes. Meanwhile, buyers who are in search of more affordable homes
are grappling with fewer choices and fierce competition."
To read the full report, including metro-level data and
analysis, please
visit: https://www.redfin.com/news/luxury-real-estate-q3-2020
About Redfin
Redfin (www.redfin.com) is a
technology-powered residential real estate company, redefining real
estate in the consumer's favor in a commission-driven industry. We
do this by integrating every step of the home buying and selling
process and pairing our own agents with our own technology,
creating a service that is faster, better and costs less. We offer
brokerage, iBuying, mortgage, and title services, and we also run
the country's #1 real estate brokerage search site, offering a host
of online tools to consumers, including the Redfin Estimate. We
represent people buying and selling homes in over 90 markets in
the United States and Canada. Since our launch in 2006, we have
saved our customers over $800 million
and we've helped them buy or sell more than 235,000 homes worth
more than $115 billion.
For more information or to contact a local Redfin real estate
agent, visit www.redfin.com. To learn about housing market trends
and download data, visit the Redfin Data Center. To be added to
Redfin's press release distribution list, email press@redfin.com.
To view Redfin's press center, click here.
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SOURCE Redfin