SEATTLE--(BUSINESS WIRE)--Home prices in the luxury market fell in the third quarter for the first time since 2012, according to Redfin (www.redfin.com), the next-generation real estate brokerage. Prices in the luxury market, which Redfin defines as the priciest 5 percent of home sales, fell 2.2 percent year over year, while prices in the rest of the market increased 3.8 percent.
The dip in luxury values might indicate that wealthy buyers and foreign investors are stepping out due to volatility in the global markets and fears that prices have climbed too high, too quickly. A bigger supply of luxury products might also be pushing prices down.
“High-end buyers are usually not weighed down by rates, mortgages or competition from other buyers, but they do look for deals,” said Redfin chief economist Nela Richardson. “The luxury market was the first to recover from the housing downturn, and now it’s a bellwether of slowing price growth for the rest of the market. Sales at the top end of the market continue to soar, but prices are downshifting.”
The biggest luxury-market losers were Scottsdale, Ariz. and Boca Raton, Fla., where prices sunk 15 percent year over year. Fort Lauderdale, Fla. saw a 14 percent drop in values. Luxury prices in Boca Raton and Fort Lauderdale have now seen significant declines for two consecutive quarters, likely due to a wave of luxury condos hitting the market.
Not all markets had a slowdown. Washington, Denver, Delray Beach, Fla., and Bend, Ore., saw double-digit, year-over-year price gains in the third quarter. In California, the East Bay of San Francisco was also hot. In Oakland and Fremont, luxury home prices increased 9 percent and 8 percent respectively.
According to local Redfin agent Mia Simon, Oakland and Fremont are both popular because they are more affordable than San Francisco and Silicon Valley. Even well-heeled buyers who can afford a home in the top 5 percent of the market are concerned about the sky-high prices in San Francisco and San Jose. Simon expects Oakland and Fremont to continue to see above average appreciation in the years to come due to well-ranked schools, walkability and public transportation options.
To read the full report, complete with market-by-market data on the biggest luxury market winners and losers, please visit: https://www.redfin.com/blog/2015/12/home-prices-in-the-luxury-market-fell-this-summer-for-the-first-time-since-2012.html.
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About Redfin
Redfin (www.redfin.com) is a next-generation real estate brokerage that represents people buying and selling homes. Founded by technologists, Redfin employs a team of experienced, full-service real estate agents who are advocates, not salespeople, earning customer-satisfaction bonuses, not just commissions. Redfin.com features all the broker-listed homes for sale, as well as for-sale-by-owner properties that don't pay brokers a commission. Redfin also offers online tools, built by its own software engineers, that make the entire process of buying or selling a home easier and more fun. The company serves major markets across the U.S. and has closed nearly $20 billion in home sales. In 2012, Redfin was named one of The DIGITAL 100: World's Most Valuable Private Tech Companies by Business Insider.
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