Luxury homes prices rose 7.9 percent year-over-year during this year’s first quarter, according to a report from Redfin.
Homes in the top 5 percentage of most-expensive homes sold for an average $1.8 million during the first quarter, Redfin found. The average price for homes in the bottom 95 percentage was $330,000 during the first quarter, up 7.5 percent compared to a year earlier.
Redfin attributed the price appreciation to a decline in supply. During the quarter, the number of homes priced at or above $1 million fell 20.4 percent compared to a year earlier, while the number of homes priced at or above $5 million dropped 19.2 percent.
“For the first time since changes to the tax code went into effect, luxury buyers could no longer deduct more than $10,000 in state and local property taxes or interest for mortgages over $750,000. In a world of balanced supply and demand these changes would have dampened price growth,” Redfin Chief Economist Nela Richardson said in a release. “Instead, this quarter saw the strongest luxury price appreciation in four years, demonstrating that the current inventory crunch is extremely broad-based and affects buyers at every price range.”
The inventory shortage for more affordable homes was even more severe during the first quarter, as the number of homes for sale priced below $1 million fell 22.8 percent compared to last year, Redfin found.
According to Redfin, the average sale price for a luxury home in Vero Beach, Fla. jumped 68 percent over last year to $2.65 million. Luxury home prices increased 51.3 percent in Reno, 26 percent in Las Vegas and 22.4 percent in Henderson, Nev.
“We're seeing an influx of buyers from high-cost areas such as Seattle, San Francisco and Southern California. Some come for retirement and the low taxes, others for tech jobs at companies like Tesla, Amazon and Switch,” Redfin Reno agent Jaime Moore said. “More companies are relocating here as the cost of living for the average employee has gotten too high in other cities. This is all leading many buyers to our area with larger pocketbooks than we have seen in the past and bidding wars and prices are reflecting that demand.”
Redfin said year-over-year luxury home prices declined during the first quarter in Long Beach, Calif. (down 26.1 percent); Washington, D.C.(down 9.6 percent), Fort Lauderdale ( down 7.3 percent) and in Clearwater, Fla. (down 4.5 percent).