Luxury Home Prices Post Double-Digit Drops in the Bay Area, Seattle
I found this fascinating article written by Lily Katz for Redfin News, and summarized it to share with you.
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Luxury home prices in San Francisco are experiencing the sharpest decline across the United States. The median sale price of luxury homes in San Francisco dropped by a significant 12.7% year-over-year in the second quarter, reaching $4.8 million. This decline is the largest among the 50 most populous metropolitan areas in the country, though it is an improvement from the previous year's record high of $5.5 million.
Other West Coast tech hubs like Seattle, Oakland, and San Jose have also seen substantial decreases in luxury home prices, ranging from 10.3% to 12.3%.
The drop in prices is attributed to several factors, including a surplus of luxury condos under 1,000 square feet which are struggling to sell, resulting in significant discounts for buyers. The luxury housing market is affected by the stock market's performance, with tech layoffs and declining stock values affecting the purchasing power of potential buyers. Additionally, San Francisco's housing supply has increased, contributing to the decline in prices.
Despite these price drops, luxury home prices nationwide have increased by 4.6% year-over-year to a median of $1.2 million in the second quarter. The shortage of available homes has created competition, supporting higher prices.
The report also highlights that the decline in luxury home listings is slower compared to non-luxury homes, likely due to wealthier homeowners' ability to handle higher mortgage rates and the relative strength of the luxury home construction market.
While luxury home sales have fallen by 24.1% year-over-year, this decline is the smallest observed over the past year. This could be attributed to an improving stock market and decreasing recession concerns, which are encouraging high-end buyers to re-enter the market.
In terms of different metro areas, San Francisco, Seattle, and Oakland experienced the most significant drops in luxury home prices, while New Brunswick, NJ, Charlotte, NC, and Newark, NJ, saw the highest increases.
Supply-wise, the number of active luxury home listings decreased most in Chicago, Cincinnati, and Cleveland, and increased the most in Austin, Nashville, and Tampa.
New luxury home listings decreased substantially in Las Vegas, Phoenix, and Detroit, with only Austin, San Francisco, and Nashville experiencing increases.
Regarding home sales, the steepest declines in luxury home sales occurred in Miami, Nassau County, NY, and Los Angeles, while San Francisco, Tampa, and Fort Worth, TX, saw smaller declines.
For more information, please check out the original article by Lily Katz, for Redfin News.