The price of luxury homes in the U.S. rose 8.8 percent in the second quarter of the year compared to the same period in 2023, according to a recent Redfin report—reaching an all-time high that is scaring off potential buyers, especially in states like Florida.
The typical U.S. luxury home sold for a record $1,180,000 between April and June, jumping up almost 9 percent compared to a year earlier—the biggest increase in nearly two years. During the same period, the median sale price of non-luxury homes rose by a more modest 3.8 percent to still reach a record high of $342,500.
Whichever way you turn, it’s a tough time for buyers, especially as mortgage rates continue hovering around the 7 percent mark and prices won’t come down either. But the pace at which luxury home prices have risen is more than double that of non-luxury homes.
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According to Redfin’s definition, luxury homes are those estimated to be in the top 5 percent of their respective metropolitan area based on market value. Non-luxury homes, on the other hand, are estimated to be in the 35th to 65th percentile based on market value.
In some Florida cities, the high price of luxury homes is discouraging sales.
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In Fort Lauderdale, where prices increased by 8.23 percent year-over-year in the second quarter of the year, the number of homes sold fell by 0.8 percent. In Orlando, where prices increased by 9.7 percent year-over-year in the same time frame, the number of homes sold dropped 3.7 percent compared to a year earlier.
In West Palm Beach, prices rose by 5.26 percent between April and June but the number of homes sold dropped by 5.5 percent. West Palm Beach saw three of the top-ten most expensive U.S. home sales in the second quarter of the year, one for 51.3 million, another for $50 million and yet another for $49.6 million. The most expensive sale overall was in Glenwood Springs, Colorado, for $77 million.
Other cities in the Sunshine State, on the other hand, saw a rise in the number of homes sold in the second quarter despite rising prices. In Jacksonville, prices rose by 3.31 percent while sales jumped by 13.2 percent. In Miami, prices climbed by 10.57 percent while sales grew by 12.1 percent. In Tampa, prices increased by 7.66 percent and sales by 14.3 percent.
In all these cities, inventory has been growing in the second quarter of 2024 compared to a year earlier by over 10 percent at least. In places like Jacksonville (28.9 percent), Miami (21.8 percent), Orlando (22.7 percent), and Tampa (29.6 percent), active listings increased by over 20 percent.
As inventory increases, luxury homes are sitting longer on the market before going under contract.
“We are seeing luxury homes selling within 30-45 days, but that’s a lot longer than in 2022 when they were flying off the shelf,” Juan Castro, a Redfin Premier agent in Orlando, Florida, said in a press release. “International cash buyers are still driving activity, but we have seen a slowdown in local buyers, as it’s really hard to upsize to a luxury home with a 7 percent mortgage rate.”
Uncommon Knowledge
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