High-End Home Sales Booming as Lower Tiers Fizzle

While home sales have largely struggled so far this year, there's one market segment that's actually holding up well, according to Redfin: the very highest price tier.

In a look at sales trends, the brokerage found that sales of homes in the uppermost price range are up 21.1 percent compared to last year. While that's down from a gain of 35.7 percent recorded in 2013, it's still far ahead of the rest of the market, which has seen a 7.6 percent drop in sales.

"For the top 1 percent, the housing market is still booming," said Redfin analyst Troy Martin in a blog post. "But for the rest of the market, the recovery is running out of gas."

In fact, according to Redfin, 10 of the its surveyed luxury markets have seen sales growth above 50 percent so far this year, and the company reports Oakland and San Jose are on track to nearly double the number of home sales in the most expensive slice of the market.

Of the markets examined in Redfin's analysis, the combined average minimum price for the top 1 percent of homes was $1.66 million, with prices ranging from $5.35 million in San Francisco down to $815,000 in Raleigh-Durham, North Carolina.

Among buyers shopping in that price tier, 44.7 percent made their recent purchases in cash—compared to just less than one-third of shoppers among all home sales.

Though banks don't offer conventional loans for such high-priced homes, Martin describes what it would take to afford one: "In San Francisco, a luxury homebuyer would need a million-dollar down payment and an annual salary of $916,000 to qualify for a 30-year fixed-rate loan, and to afford what would be a $21,369 monthly mortgage payment."

Meanwhile, "In a lower-priced luxury market such as Raleigh, an annual income of just $140,000 could keep a buyer comfortably among the 1 percent in this hypothetical scenario."

In a market in which only 41 percent of homes are within reach of a household bringing in two median incomes, Redfin found that homes in luxury markets nationwide are priced at about 6.2 times the median national price. However, that gap is far higher in sunny, coastal metros—like Miami, where the top 1 percent of homes are 14.9 times the local median.