Consumers who held off on purchasing luxury homes as their prices continued to decline during the past year may have stood on the sidelines for too long.
During the third quarter, the average sale price for luxury homes nationwide rose 0.3 percent year-over-year to $1.6 million, according to a report from Redfin, which said the price increase ended three consecutive quarters of declines.
According to the report, sales of homes priced at or above $1.5 million rose 3.2 percent in the third quarter. Sales of homes priced below $1.5 million rose 2.9 percent.
“Because recession fears peaked over the summer, I expected luxury home prices and sales to dip. But it appears that nerves alone weren't enough to scare off wealthy homebuyers,” Redfin Chief Economist Daryl Fairweather said in a release. “The U.S. economy grew faster than expected in the third quarter, partly as a result of healthy consumer spending.
“Those results, along with flat luxury home prices and rising sales, go to show that Americans are basing their spending habits on their own personal financial situation rather than concerns about global economic tensions,” Fairweather added. “For many, that means strong incomes and good employment prospects.”
During the quarter, luxury prices increased in more than two-thirds of the markets tracked by Redfin. West Palm Beach, Fla., had a 128.3 percent year-over-year increase to an average price of more than $3.7 million. It was followed by Clearwater, Fla. (up 49.3 percent to $1.6 million) and Delray Beach, Fla. (up 47.3 percent to $2.6 million).
“Homebuyers can get a lot more for their money in West Palm Beach than in more expensive places like Miami and Palm Beach Island,” Redfin agent Elena Glatko said. “And I've noticed that both luxury buyers and sellers feel that real estate is one of the assets least susceptible to economic changes. They believe that over time, luxury real estate is a better investment than the stock market.”
Redfin said the greatest declines in luxury prices in the third quarter were in
Charleston, S.C. (down 17.6 percent to an average of $1.6 million); Virginia Beach, Va. (down 7.6 percent to $1 million); and Reno, Nev. (down 6.9 percent about $1.5 million).