“Demand for luxury is improving. That’s showing up primarily in an increase in sales right now, but it’s also putting some slight upward pressure on prices,” said Redfin chief economist Daryl Fairweather. “We’re ending the year in a much better position than we started, which is a good sign for 2020. I expect price growth to return to at least 3% to 5% by spring.”
Luxury home prices experienced smaller growth than homes in the other 95% of the market, which had a 5.2% gain to an average of $317,000. 21% of luxury homes sold above list price during Q4, a slight drop from 23% a year ago. Redfin said that 21.6% of non-luxury homes sold above list price, a small increase from 20.8% the year prior. Luxury homes on the market during Q4 took 60 days to go under contract, while non-luxury homes took 43 days to go under contract.
“Back in 2018, prices were growing just as fast in the top of market as they were in the bottom of the market, and it’s unclear if that’s going to happen again, as prices are already so high and a lot of the demand seems to be at the low end,” Fairweather said. “But if wealth inequality continues to rise and the rich keep getting richer, it’s very possible that luxury could accelerate to that point again.”
West Palm Beach, Florida had a 104.5% year over year increase to an average home price of about $3 million, with the biggest luxury home price gain for the second quarter in a row.
The biggest price decline was in St. Petersburg, Florida, dropping 13.3% to an average of $1.21 million in Q4, the largest drop seen in any of the cities Redfin tracks.
The priciest deals in the U.S. sat in California, with homes that featured bowling alleys, beach cabanas and even yacht parking.
Meanwhile, luxury apartment sales in Manhattan sank big time, with sales of apartments priced at $5 million or more falling 38% in Q4, leaving behind a two-year supply of luxury apartments on the market.