Sales of luxury homes increased 41.5 percent year-over-year in the third quarter, according to a report by Redfin.
Redfin said the third-quarter increase in sales of luxury homes was the largest since 2013. Meanwhile, Redfin said sales of medium-priced homes increased 3 percent, and sales of affordable homes declined 4.2 percent in the third quarter.
“The luxury housing market normally takes a hit during recessions as wealthy Americans tighten their purse strings, but this isn’t a normal recession,” Redfin Chief Economist Daryl Fairweather said in a release. “Remote work, record-low mortgage rates and strong stock prices during the pandemic are allowing America’s wealthy families to gobble up expensive houses with home offices and big backyards in the suburbs.”
“Meanwhile, scores of lower- and middle-class Americans have lost their jobs or are still renting in the city because they’re essential workers and have to commute into work, so they’re unable to reap the benefits of homeownership,” Fairweather said.
According to the report, luxury sales jumped 86.1 percent in Sacramento; 62.8 percent in Riverside, Calif.; 60.9 percent in Oakland, Calif.; 60 percent in Portland, Ore.; and 50 percent in West Palm Beach, Fla.
“It’s well known in the real estate world that luxury properties typically take longer to sell, but this may be starting to change,” Redfin Sacramento agent Kelly Crocker said. “Sacramento has always been a popular landing place for transplants from crowded cities, but now with the pandemic and record-low mortgage rates, it’s becoming an even bigger hotspot for people who have the means to move. We’re seeing a lot of tech workers sell their expensive Silicon Valley homes and come out here in search of more space and more bang for their buck. A number of my buyers have been eyeing the Sacramento suburbs for a while, but are just now pulling the trigger because rates are low and they no longer need to commute into work.”
Redfin said third-quarter sales of luxury home declined in Philadelphia (-8.2 percent) and Nassau County, N.Y. (-2 percent).
“Philadelphia is seeing more luxury sellers than buyers right now because luxury homeowners are fleeing the city during the pandemic,” Redfin Philadelphia agent Blakely Minton said. “Why spend $1 million on a high-end home in the city when you can get a larger house with land in the Philadelphia suburbs for a more affordable price?”