SEATTLE--(BUSINESS WIRE)--Global economic volatility rocked the U.S. luxury housing market in the first quarter of 2016, as the average sale price of luxury homes fell 1.1 percent compared to last year, according to Redfin (www.redfin.com), the next-generation real estate brokerage. The price decline followed a year of weakening luxury home price growth, but marks the first time prices have gone negative since 2012.
Redfin defines the luxury market as the priciest 5 percent of homes sold in a given quarter. Home prices for the bottom 95 percent of the market maintained positive momentum, increasing 4.7 percent year over year.
The luxury home price decline was felt in cities across the country, including: Miami Beach (-13.7%), Austin (-11.8%), Boston (-11.8%), Houston (-5.1%), San Francisco (-4.7%), Washington (-4.2%), and Los Angeles (-1.3%). With the exception of Miami Beach, prices in these cities only fell at the high end, while the bottom 95 percent of the market saw year-over-year price gains.
“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.”
Inventory of homes priced above $1 million increased 3.3 percent from a year prior, with homes priced above $5 million up 13.2 percent. Luxury home sales were up 6 percent compared to a year ago.
Not all cities experienced softness in the luxury market. In Oakland, the price of a luxury home rose nearly 50 percent compared to a year ago as the city has become a destination for high-end buyers looking beyond San Francisco. Luxury homes also saw price gains in Irvine, California (41.4%), Clearwater, Florida (31.2%), and Sarasota, Florida (27.3%).
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Redfin (www.redfin.com) is the next-generation real estate brokerage, combining its own full-service agents with modern technology to redefine real estate in the customer’s favor. Founded by software engineers, Redfin has the country’s #1 brokerage website and offers a host of online tools to consumers, including the industry’s most accurate home-value estimate, the Redfin Estimate. Homebuyers and sellers enjoy a full-service, technology-powered experience from Redfin real estate agents, while saving thousands in commission. Redfin serves more than 80 major metro areas across the U.S. The company has closed more than $31 billion in home sales, and saved customers more than $335 million in fees, and counting.
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