The average sale price for luxury homes nationwide fell 1.6 percent to $1.55 million in the first quarter of 2019, according to a new report from Redfin.
The real estate brokerage said the annual decline in the sale price for luxury homes during the first quarter was the first in nearly three years.
Redfin’s analysis of the most expensive homes sold in the quarter (top 5 percent) found that homes priced at or above $2 million fell 16 percent year-over-year last quarter, marking the second consecutive quarter of declining sales and the biggest luxury sales decline since 2010.
Meanwhile, Redfin said the supply of homes priced at $2 million or above increased 14 percent annually in the first quarter, the fourth quarter in a row of increases. In the other 95 percent of the market, home prices rose 2.7 percent year-over-year to an average of $300,000 in the first quarter.
“Because homeowners can’t deduct as much mortgage interest as they used to be able to, the calculus has changed when it comes to buying a home, especially an expensive one,” Redfin Chief Economist Daryl Fairweather said in a release. “Although the new mortgage rule applies to everyone in the country, high earners in states with high income taxes like California and Massachusetts saw their tax bills surge.
“Not only do the new rules make it less desirable to purchase a multi-million dollar home in high-tax states, it has also motivated some people — especially those with big incomes and big housing budgets — to consider moving to places like Florida, Washington or Nevada, which have no state income tax,” Fairweather said.
According to the report, Boston had the biggest year-over-year price drop for luxury homes in the first quarter (-22.4 percent); followed by Newport Beach, Calif. (-21.8 percent); Miami (-19.3 percent), San Jose, Calif. (-2.7 percent); and San Francisco (-0.3 percent).