1Q General Home Sales Down 4%
Luxury Home Sales Up Over 2%
Cash-Rich Wealthy Less Affected by High Interest Rates
While the U.S. real estate market has contracted due to high interest rates, luxury real estate prices, including high-end homes, have shown vitality by reaching record highs.
According to data from real estate brokerage Redfin cited by CNBC on the 22nd (local time), sales of luxury homes in the U.S. (top 5% of market value homes in major metropolitan areas) increased by 2.1% in the first quarter of this year compared to the same period last year. This marks the largest increase in three years, contrasting with a 4.2% decline in sales of regular homes (homes ranked between the 35th and 65th percentile in market value within major metropolitan areas) during the same period.
Supported by increased transaction volume, luxury home prices also hit record highs. The median price of luxury homes in the first quarter was $1,225,000 (approximately 1.6 billion KRW), up 8.7% from the same period last year. The price increase rate for regular homes remained about half that of luxury homes at 4.6%.
CNBC pointed out that this divergence in the U.S. real estate market is due to differences in high interest rate levels and supply scale. As the 30-year fixed mortgage rate in the U.S. surpassed 7%, most homebuyers found it unaffordable, but wealthy buyers often purchase real estate in cash without loans, making them less vulnerable to high interest rates. In fact, the proportion of luxury homes sold entirely in cash reached a record high of 47% in the first quarter of this year.
Increased supply of listings also contributed to the boom in the luxury home market. While the total inventory of regular homes decreased by 2.9% year-over-year in the first quarter, luxury home listings increased by 12.6%. New luxury home listings surged 18.5% compared to the same period last year, marking a double-digit increase for the second consecutive quarter.
David Palmer, a Redfin agent in Seattle, explained, "People who have the funds to buy luxury homes are confident that prices will continue to rise, so despite the prolonged high interest rates, they view the market more optimistically than most investors. Because of this increased demand and the continuous rise in luxury home prices, homeowners think now is a good time to liquidate their assets."
Meanwhile, as of the first quarter of this year, the city with the steepest luxury home price increase was Providence, Rhode Island (16%). Seattle ranked first in luxury home sales growth rate (37%). Miami, Florida, became the city that produced the most expensive luxury home sold, priced at $48 million.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
