Sales of luxury homes in the U.S. rose 41.6 percent year over-year in the first quarter of 2021, far higher than any other segment of the housing market, according to a Redfin report. Sales of affordable homes increased 7 percent, and sales of mid-priced homes climbed 5.9 percent.
Historically, sales growth has been similar between luxury, expensive, mid-priced, affordable, and most affordable homes, but the pandemic has changed that. Affluent Americans with the flexibility to work from anywhere are taking advantage of low mortgage rates and buying up high-end houses, Redfin reported.
The 49 most populous metropolitan areas all experienced growth in the sale of luxury homes during the first quarter, according to Redfin. Miami saw the largest gain, where luxury-home sales soared 101.1 percent year-over-year. Next were San Jose, Calif., (92.3 percent), Oakland, Calif. (82 percent), Sacramento, Calif., (79.3 percent) and Las Vegas (72.7 percent).
“Luxury properties, even those in the $3 million range, are getting multiple offers and going for well over the asking prices,” Oakland Redfin real estate agent Katy Polvorosa said in a release. “That’s something we haven’t seen before, even though the Bay Area has many affluent residents. Everyone just wants more space and big backyards, whether it’s because they’re stuck at home during the pandemic or because they have a growing family.”
Meanwhile, many lower-income Americans lost their jobs and lack the means to become homeowners. Also, the supply of affordable homes for sale dropped 14.9 percent year-over-year in the first quarter, and the supply of mid-priced homes fell 19.8 percent. New listings of luxury homes grew 15.8 percent year-over-year in the first quarter.
“With a huge shortage of affordable homes for sale, many non-luxury homeowners are hesitant to put their properties on the market because they’re worried they’ll have trouble finding their next house,” Redfin Chief Economist Daryl Fairweather said. “This isn’t as big of an issue for luxury homeowners since there’s a relative abundance of high-end homes to choose from.”