Life's a beach for the luxury homes market which ended December with a year over year increase of 7.4 percent to an average of 1.76 million in the fourth quarter of 2017 according to an analysis by online real estate brokers, Redfin.
The analysis tracks home sales in more than 1,000 cities across the country and defines the luxury market as the top 5 percent most expensive homes sold in the city in each quarter. The high demand with a shortage of availability of luxury homes led to the rising prices.
The report indicated that the number of homes for sale priced at or above $1 million fell 23.8 percent compared to the same period last year, marking three consecutive quarters of declines in luxury supply. The supply of homes priced at or above $5 million followed suit and were down 23.4 percent.
Despite the shortage of supply the sale of homes priced at or above $1 million were up 15.2 percent from a year ago, and sales of homes priced at or above $5 million were up 13.7 percent.
“The stock market hit all-time highs with gains in nearly every sector last quarter, instilling confidence among the wealthiest homebuyers As a result, we saw double-digit growth in luxury home sales in the last months of the year,” said Nela Richardson, Chief Economist at Redfin.
According to the analysis, Beachfront communities in Florida were the biggest winners of this price boom with luxury home prices in Sarasota and Delray Beach increasing 45.6 percent and 41.3 percent respectively. For five other Florida cities including Boca Raton, Miami, Fort Lauderdale, Vero Beach, and West Palm Beach, prices rose by more than 25 percent year over year.
California, which is otherwise a state with some of the hottest home markets in the U.S., lost out when it came to luxury home sales with San Francisco posting the largest year over year decline in luxury home prices down 12 percent to an average of $5.03 million.