Sale prices of luxury homes in the second quarter of this year were up 7.5 percent from a year ago, the first time luxury gains have outpaced the rest of the market since 2014, according to Redfin, a real estate brokerage which defines luxury as the top 5 percent of the most expensive homes sold in each city in each quarter.
While some point to the recent runup in the stock market, the real reason for the luxury recovery may be a shift in the mind of sellers. They were asking too much, and now that they’re asking less, there is more action in the market, in turn boosting prices again…
Luxury home sales have been rising steadily, causing the supply of those homes for sale to drop. Sales of homes priced above $1 million jumped 19 percent in June compared with a year ago, according to the National Association of Realtors. That was a much larger sales gain than in any of the lower price points.
The sales surge has caused a decline in the supply of luxury homes. Listings at or above $1 million fell 9.4 percent compared with the same period last year, according to Redfin. Those priced at or above $5 million were down about the same. This after five consecutive quarters of double-digit inventory growth.
This change in the luxury market is unlikely to help many Americans though a number of these expensive properties get a lot of media attention. Come to think of it, what exactly is the purpose of media outlets regularly showing expensive homes? Here are a few options:
- This could be the curiosity of the masses regarding the practices of the wealthy. How does the other half (or top 10%) live?
- Or, is it intended as a critique of the well-resourced by holding up their lavishness up for public display? Look at those wealthy people with their ostentatious homes.
- Alternatively, might it encourage class conflict and social change since these expensive homes are out of reach of most Americans? For the many Americans who struggle to find decent housing, highlighting the luxury of the wealthy might serve as a reminder of the distance between groups.
- At the least, such regular stories might display the important place real estate and homeownership play in American wealth. It is one thing to own financial instruments but another to purchase more tangible items like property and housing.
This all might be different if the housing market as a whole was booming, particularly if the lower end of the market with smaller homes or starter houses was growing. I suppose this could be a research question: during periods of rising economic boats for all (such as the several decades after World War II), are there fewer media stories on homes and properties of the wealthy compared to homes for the average person?