Highest-End Luxury Home Prices Fell in First Quarter 2016
The priciest five percent of United States homes sold in the first quarter of 2016 experienced a drop in sales prices, falling 1.1 percent compared to this time last year, according to Redfin. This was despite the remaining 95 percent of homes maintaining positive momentum and increasing 4.7 percent compared to this time last year. Austin, Texas had the second largest drop among the highest-end luxury homes at 11.8 percent. Miami Beach had the largest drop at 13.7 percent. Boston was third with an 11.8 percent drop, Houston was fourth with a 5.1 percent drop, and San Francisco was fifth with a 4.7 percent drop. Aside from Miami Beach, these areas still experienced an increase in sales prices in the other 95 percent of homes sold. Experts attribute the drop in sales prices for the highest-end luxury homes to global economic volatility. It follows a period of weakening growth in this segment of the market, but it is the first time sales prices have gone negative in any given sales quarter since 2012. “Luxury buyers are out of step with the rest of the market because their wealth is at stake,” said Redfin chief economist Nela Richardson. “Instead of cheering rock-bottom mortgage rates, luxury buyers recoiled from high-end spending in the face of volatile asset prices. Luxury demand, especially for vacation and investment properties, has been more fragile this year, causing prices to slump.” It is important to note that luxury home sales, in terms of volume, increased six percent compared to 2015’s first quarter. Inventory in the U.S. for properties listed above $1 million increased 3.3 percent compared to 2015’s first quarter, and inventory for properties listed above $5 million increased 13.2 percent compared to 2015’s first quarter.