A Steep Rise in the Luxury Market
With a strong economy overall, a rising stock market, and robust corporate profits, it’s only logical that real estate prices, in general, are climbing and more specifically that the luxury market is leading the way. The luxury sector is considered the top five percent of residential sales in a measured area.
Realtor.com’s Luxury Home Index measured 91 counties and found that 17 had double digit increases year over year (July 2018 compared to July 2017). The average price increase for all the markets surveyed was a healthy 4.6%.
In over half of the 91 counties analyzed, the luxury tier had a price entry point of one million or more. The number of sales at or above one million rose 12%.
According to Danielle Hale, Realtor.com’s chief economist, “They are selling fast and demand for these homes has pushed the entry-level price point to more than one million in half of the markets studied. Although there were some pockets of weaker performance, we’ve seen double digit price growth in 19 markets for the first time in four years.”
Further, luxury homes are selling faster than in the recent past. The median age of inventory in the 91 markets studied was 108 days, down 11 days or 9.3% from a year earlier. This represents the largest move since Realtor.com began tracking the metric in 2012. A full two thirds of luxury markets are seeing inventory move faster than last year.
Sales in the luxury market are up a full 25% from a year ago, even though the homes have grown more expensive. This represents the biggest jump since January 2014.
According to Realtor.com, prices in a number of Florida markets “continue to follow in an upward trajectory.” This month, Florida accounted for the top two fastest growing luxury counties. The authors of the study note that, in particular, luxury home prices in Sarasota and Collier (where Naples is located) counties have been accelerating rapidly, with entry-level luxury prices showing sharp increases year over year. Collier County showed a very impressive 12.6% rise. Also, the median days luxury homes are on the market for these two counties combined is now 143 days, down 22% year over year on average.