The third quarter saw the largest increase of luxury home sales since 2013 with a 41.5% increase year-over-year, according to a report from Redfin. [1]
At the same time, “expensive” home sales rose by just over 17% year-over-year. Mid-priced home sales went up by 3% and affordable homes went down by 4.2%. The most affordable housing sales decreased even further, declining by 4.8% year-over-year.
The report shows that the median price of luxury homes during the third quarter was $862,700, which is a 6.5% increase year-over-year. The median home price for expensive and mid-priced homes both increased about 7% year-over-year. The median price for expensive homes in the third quarter was $402,000 and $259,000 for mid-priced homes.
The media sale price at the affordable level was $178,000, showing an increase of 6.3% year-over year. The most affordable homes had a median sale price of $90,000 with a 2.9% year-over-year increase in price.
A few California cities have seen an especially high uptick in luxury home sales, including Sacramento, Riverside and Oakland, which saw the highest increases in luxury home sales. Sacramento’s luxury sales went up by 86.1%. Meanwhile, Riverside, CA increased by 62.8% and Oakland increased 60.9%.
Portland, Oregon and West Palm Beach, Florida also saw major gains in luxury housing sales, increasing 60.6% and 59.7% year-over-year, respectively.
New listings for luxury homes have also risen far higher than more affordable listings. Luxury housing soared by a 45% year-over-year increase in new listings. Expensive new listings rose by 13.8% and mid-priced new listings increased by only 3.5%. The number of new affordable listings went up by a 2.8% year-over-year increase and new listings that were most affordable increased by 4.1%
Despite the pandemic and the economic recession it has caused, Redfin chief economist Daryl Fairweather says wealthy Americans haven’t been as heavily impacted as they usually are during a recession.
“The luxury housing market normally takes a hit during recessions as wealthy Americans tighten their purse strings, but this isn’t a normal recession,” Fairweather says. “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.”
However, Fairweather states, “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,” and are far less likely to be able to purchase homes at this time.
The third quarter’s home sales trends show the uneven impact that COVID-19 has had on Americans with less financial resources.