Home prices are rising across the country, but luxury home prices are skyrocketing. According to data from Redfin, luxury home prices rose twice as fast as non-luxury homes in the first quarter of 2024.
But even as prices jumped, sales are still rising, even as prices for non-luxury homes have declined. The median-priced luxury home sold for a record $1.225 million in the first quarter of 2024, up 8.7% year over year. At the same time, sales of luxury homes were up 2%, compared to a decline of 4% in non-luxury homes, which sold at an also-record median of $345,000.
Why Are Luxury Home Prices Rising So Fast?
The luxury real estate agents we interviewed all agreed on one thing: The rise in prices is largely due to a lack of supply. Shocking.
“There isn’t enough inventory for people to buy,” Jason Mudd, managing partner at real estate agency Cindy Raney & Team in Fairfield County, Connecticut, told BiggerPockets. “So long as you’ve got this huge inability to build enough homes, you’re going to have a supply-and-demand issue.”
While the total supply of luxury homes rose 13% year over year, supply is still below pre-pandemic levels, according to Redfin, which looked at homes estimated to be in the top 5% of their metro area based on market value.
There’s a lot of cash being made, and many luxury real estate buyers are ready to pay in cash or almost all cash. This is helping contribute to demand, as luxury…