Redfin defines luxury homes as “the most expensive 5% of homes in each metro area” — and according to their June 10th report, luxury home sales fell 17.8% year over year during the three months ending April 30. This is significant in that it marks the biggest drop since the start of the pandemic. Non-luxury home sales are down as well, but not as much with the decrease being 5.4%.
Several factors are at play when analyzing the luxury home sale decline. Steadily climbing interest rates, inflation, and an increase in stock market uncertainty are deterring prospective luxury home buyers from purchasing, since each of these factors could potentially add thousands of dollars more to their monthly mortgage payment. The year-over-year sales percentage decline is also reflective of the market for high-end homes balancing out again following an almost 80% surge in sales one year ago.
So what does this mean for the housing market overall? Redfin real estate agent Elena Fleck explains,
“The pool of people qualified to purchase properties is shrinking because the stock market is falling and mortgage rates are rising. The good news for buyers is the market is becoming more balanced and competition is easing up.”
Moreover, the inventory crunch in the luxury market is easing since the sales decline leaves more homes available to buy. An increase in new luxury listings is one reason total supply isn’t falling as dramatically as it was last year. New listings of high-end houses rose 1.1% year over year during the three months ending April 30 — the first increase since summer 2021.
Things are rapidly shifting in the housing market, so our best piece of advice to buyers, sellers, and investors is to partner with an experienced real estate professional to keep your finger on the pulse of the ever-changing trends. Contact your local real estate specialist today at SurterreProperties.com to get started.
