High-End Home Sales Surge Nearly Twice as Fast as Sales of Mid-Priced Homes
This is according to a Redfin analysis that divides U.S. residential properties into three equal-sized buckets—high-end, mid-priced and affordable—based on Redfin Estimates of the homes’ market values.
Purchases of high-end homes have soared as wealthy Americans have reaped the benefits of a strong stock market, swelling savings accounts and remote work. A relative abundance of high-end homes hitting the market has also enabled purchases in that segment of the market to flourish.
“So far, the economic recovery from the pandemic has disproportionately benefited Americans with bigger bank accounts,” said Redfin chief economist Daryl Fairweather. “This means a lot of the demand for homes is coming from folks who are well-off, while many lower-income Americans sit on the sidelines because they’ve been priced out of the housing market due to surging prices.”
The surge in purchases of expensive properties was led by San Francisco, which saw an 82.4% jump in high-end home sales during the three months ending April 30—the biggest gain among the 50 most populous U.S. metropolitan areas. Next came Oakland, CA (+71.8%), Miami (+70.4%), San Jose, CA (+66%) and Las Vegas (+64.4%)
“Growth in high-end-home sales is currently skewed toward some of the most expensive markets in the country—like the Bay Area and parts of Florida—which is fueling an uptick in high-end home prices,” Fairweather said. “The high-end sales growth in Florida is being fueled by an influx of affluent out-of-staters, while the gain in the Bay Area is more of a recovery from the massive decline in sales the region experienced at the start of the pandemic when scores of Americans left big cities. Folks may be starting to feel more comfortable putting down roots in major hubs now that they’re gaining clarity on post-pandemic life.”
Prices of high-end homes in the U.S. rose a record 14.3% year over year during the three months ending April 30. By comparison, prices of mid-priced homes climbed a record 12.4% and prices of affordable homes increased 10.2%. When we discuss “record” changes, we are referring to Redfin’s records, which date back to 2013.
“As the economic recovery starts to touch more middle-class Americans, we expect to see price growth accelerate for affordable and mid-priced homes,” Fairweather said.
“In the high-end market, we’re not only seeing multiple offers—we’re seeing buyers waiving appraisal and inspection contingencies, which doesn’t normally happen,” said Vincent Shook, a Redfin real estate agent in Phoenix. “The biggest driver is the influx of people from California. Still, competition remains toughest for buyers of affordable and mid-priced homes.”
Listings of high-end homes rose 19.3% year over year during the three months ending April 30—outpacing a 13.9% gain in affordable listings and a 9.1% increase in mid-priced listings.
“High-end homes are flying off the market because the pandemic has fueled an uptick in demand for high-end amenities,” Fairweather said. “People are snapping up properties with home offices, big backyards and more square footage.”
For more information about this Redfin analysis, visit redfin.com.