{"id":77409,"date":"2024-01-31T05:00:42","date_gmt":"2024-01-31T13:00:42","guid":{"rendered":"https:\/\/www.redfin.com\/news\/?p=77409"},"modified":"2024-02-15T13:06:14","modified_gmt":"2024-02-15T21:06:14","slug":"luxury-housing-market-q4-2023","status":"publish","type":"post","link":"https:\/\/www.redfin.com\/news\/luxury-housing-market-q4-2023\/","title":{"rendered":"Luxury Home Prices Hit All-Time High As Record Share of High-End Buyers Pay Cash"},"content":{"rendered":"

Prices of luxury homes rose at twice the pace of non-luxury homes at the end of 2023, \u00a0 partly because elevated mortgage rates are irrelevant to many affluent buyers. Low inventory is another factor driving prices up: Even though luxury new listings rose, overall supply is still below pre-pandemic norms.<\/span><\/i><\/p>\n

The typical U.S. luxury home sold for a record $1.17 million in the fourth quarter, up 8.8% from a year earlier. Prices of non luxury homes increased at half the pace, rising 4.6% year over year to a record $340,000.\u00a0<\/span><\/p>\n

\"\"<\/p>\n

This is according to an analysis that divided all U.S. residential properties into tiers based on <\/span>Redfin Estimates<\/span><\/a> of the homes\u2019 market values as of January 2024. This report defines luxury homes as those estimated to be in the top 5% of their respective metro area based on market value, and non luxury homes as those estimated to be in the 35th-65th percentile based on market value.\u00a0<\/span><\/p>\n

The outsized increase in luxury prices, along with a jump in luxury new listings and improving sales, signal that affluent homebuyers and sellers are becoming more active.\u00a0<\/span><\/p>\n

Share of luxury homes bought in cash hits record high<\/h3>\n

A record-high share of all-cash luxury home purchases drove the relative strength of the high-end housing market: Nearly half (46.5%) of the fourth quarter\u2019s luxury purchases were made in cash, up from 40% a year earlier.\u00a0<\/span><\/p>\n

Luxury prices are rising at twice the rate of non-luxury prices largely because so many affluent buyers are able to buy homes in cash, rendering today\u2019s elevated mortgage rates irrelevant. High mortgage rates have a more chilling effect on the rest of the market, upping interest payments and keeping price increases modest.\u00a0<\/span><\/p>\n

\u201cA lot of luxury buyers are coming in with cash, snapping up expensive homes,\u201d said Heather Mahmood-Corley<\/a>, a Redfin Premier agent in Phoenix. \u201cHigh-end homes are selling fast, especially in desirable areas like luxurious Scottsdale, or Tempe, which West Coast transplants love because it\u2019s centrally located. One client recently bought a house in Tempe, flipped it, and it sold for $1.4 million in two days.\u201d<\/span><\/p>\n

Low inventory is another factor pushing luxury prices up. Even though the supply of luxury homes surged from a year earlier, it\u2019s still well below pre-pandemic levels, leading to competition from well-heeled buyers over a limited number of homes.\u00a0<\/span><\/p>\n

New listings climb nearly 20% year over year to pre-pandemic levels<\/h3>\n

New listings of luxury homes jumped 19.7% year over year in the fourth quarter, the biggest increase in over two years. The increase brings the number of U.S. new luxury listings to just under 53,000, comparable to fourth-quarter levels in 2018 and 2019, just before the pandemic started.\u00a0<\/span><\/p>\n

By comparison, new listings of non luxury homes <\/span>fell<\/span><\/i> roughly 3% from a year earlier\u2013though that\u2019s the smallest decline in a year and a half.\u00a0<\/span><\/p>\n

\"\"<\/p>\n

Luxury new listings soared for several reasons:<\/strong><\/p>\n