Luxury Real Estate: What Slowdown?
December 13, 2016
While some analysts predicted a slowdown in the luxury real estate market, data shows that luxury sales have risen over the last year in most U.S. regions, according to research by John Burns Real Estate Consulting. Out of 43 counties in 16 states analyzed by the firm, home sales above $600,000 increased in 37 of them. Overall, sales in that price range this year rose by more than 10 percent year-over-year.
"There's been this notion that luxury is in a recession," says John Burns, the firm's CEO. "What's slowing and getting a lot of headlines are the $5 million homes and the $8 million homes." Though there's slowing activity in the ultra-luxury sector, median prices and demand remain strong for the remainder of the luxury market, Burns says.
Burns acknowledges high-end sales have taken a hit: Sales of homes above $600,000 made up only 5 percent of real estate transaction in the third quarter of this year compared to 10 percent for the entire year of 2015. He partially attributed the drop to markets such as New York and Miami, which have seen a decrease in activity from foreign buyers lately. Overall, though, sales of homes between $1 million and $1.1 million in the third quarter increased by 4 percent year-over-year; sales between $1.1 million and $1.2 million rose by 10 percent; and sales at $1.5 million and higher increased by 1 percent.
"While there has been some debate about softness in the luxury housing market, we continue to produce impressive results by serving what we believe is a demographic sweet spot in the luxury market," Toll Brothers CEO Douglas Yearley said on a recent earnings call. The company's average sales price was about $690,000 in markets outside of New York and California.
Source: “Luxury Home Sales in U.S. Continue to Rise,” The Wall Street Journal (Dec. 9, 2016)
Updated: April 03, 2020