Photo: A luxury home in Scottsdale
Luxury home prices are at an all-time high as a record share of buyers pay cash for homes in the country’s most exclusive areas.
According to a recent report by data journalist Dana Anderson at Redfin, the prices of luxury homes rose at twice the pace of non-luxury homes at the end of last year. The typical luxury home sold for $1.17 million in Q4 2023, up 8.8% year-over-year.
Like the non-luxury market, low inventory has been pushing prices up, but new listings are increasing as more homeowners jump at the chance to snag rich buyers offering cash for their purchases.
“A lot of luxury buyers are coming in with cash, snapping up expensive homes,” Heather Mahmood-Corley, a Redfin Premier agent in Phoenix, Arizona, told Anderson. “High-end homes are selling fast, especially in desirable areas like luxurious Scottsdale, or Tempe, which West Coast transplants love because it’s centrally located. One client recently bought a house in Tempe, flipped it, and it sold for $1.4 million in two days.”
So what is happening behind the scenes?
Chris Porter, senior vice president and chief demographer at John Burns Research and Consulting in Irvine, California, told The Mortgage Note that while all segments of the U.S. housing market felt a slowdown in the second half of 2022, since then, “we’ve seen some reversal in these trends, with inflation receding, the stock market hovering near all-time highs and signs pointing more toward the soft landing scenario the Fed was hoping for.”
Porter noted that people who are in the luxury market are less affected by interest rates. He also pointe …