Luxury home sales increased over 41% year-over-year in the third quarter, according to Redfin, compared to an increase of just 3% for medium-priced homes. The real estate site theorizes that the disproportionate increase in sales of high-end homes reflects the pandemic-led recession having a smaller effect on wealthier Americans.
“The luxury housing market normally takes a hit during recessions as wealthy Americans tighten their purse strings, but this isn’t a normal recession,” according to Daryl Fairweather, chief economist at Redfin. “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.”
The number of medium-priced homes — those priced at a median $259,000 — for sale was down 7.9% and new listings increased 3.5%. Expensive homes included those with a median price of $402,000 (the median sales price for a single-family home in Colorado was $450,000 in September, according to the Colorado Association of Realtors). Inventory was down 2.6%, while the number of new listings increased nearly 14%.
Meanwhile, new listings for luxury homes, priced at nearly $863,000, jumped almost 45%, while the number of homes for sale increased 8.4%.
“Luxury listings are skyrocketing because high-end homeowners have the financial means and the flexibility to move during this pandemic,” Fairweather said. “The growing supply of luxury homes for sale means that wealthy buyers have more options to choose from and a better chance of finding a home that checks all of their boxes.”
Meanwhile, the affordable housing crisis continues for those at lower income levels. Buyers looking for affordable homes have “fewer choices and fierce competition.”
Most-affordable and affordable homes (those with median prices between $90,000 and $178,000) saw fewer homes sold and a decline in the number of homes for sale, while new listings increased 4.1% and 2.8%, respectively.
“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, so they’re unable to reap the benefits of homeownership,” Fairweather said.