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While the overall housing market continues to struggle with low inventory and higher rates, one sector is booming—luxury homes.
As CNBC reports, sales of luxury homes are increasing while the overall market experiences its downturn. Overall real estate sales fell 4% nationwide in the first quarter, according to Redfin. Yet, luxury real estate sales increased more than 2%, posting their best year-over-year gains in three years.
Real estate experts and brokers point to interest rates and supply as reasons for the trend. Wealthy home buyers tend to close on their homes in cash, making them less vulnerable to higher interest rates.
Nearly half of all luxury homes, defined by Redfin as homes in the top 5% of their metro area by value, were bought with all cash in the quarter, according to Redfin—the highest share in at least a decade.
The flood of cash is also driving up prices at the top. Median luxury-home prices soared nearly 9% in the quarter, roughly twice the increase seen in the broader market, according to Redfin. The median price of luxury homes hit an all-time record of $1,225,000 during the period.
