Oakland, Ca. saw the shortest closing times for luxury sales with average of 28 days.Getty
It’s getting harder to buy a home in the upper price brackets.
National data from over 1,000 cities shows that homes priced in the top five percent of sales have seen prices increase steadily while the decrease in inventory continues. According to a report compiled by Redfin that was provided to Forbes in advance of publication, homes at this tier saw average sales prices increase to $1.772 million in the fourth quarter of 2018, a 4.7 percent increase compared to the same time the year prior. Homes in the lower 95 percent of prices also increased, seeing a 4.3 percent rise during last quarter.
Inventory decreases for homes over $2 millionRedfin
The is very much a tale of supply and demand. When looking only at homes priced over $2 million, there were 6.5 percent fewer homes for sale during the last three months of 2018 compared to 2017. Consequently, sales dropped by 3.9 percent during the last quarter of 2018 over 2017, which is the first time in over two years sales in that price bracket have fallen year-over-year.
“In the fourth quarter of 2018 there was a lot of economic uncertainty—mortgage interest rates peaked in November, and the stock market was all over the place,”said Redfin chief economist Daryl Fairweather in a statement. “This may have encouraged luxury sellers to hold on to their real estate assets and also caused luxury buyers to be reluctant to make major home purchases.”
West Palm Beach, Florida saw the greatest percentage point increase in Q4 2018.Getty
Despite these national level trends, there are certain pockets of the country that are seeing immense growth. West Palm Beach and St. Petersburg in Florida topped all other cities for the increase in average sales prices for luxury homes with a rise of 35% and 30.7%, respectively. In real dollars that is average prices of $1.628 million for West Palm Beach and $1.427 million for St. Petersburg.
Elsewhere in Florida, several cities had some of the largest price decreases in the country—such as Sarasota where prices dropped by 30.7% to $1.76 million and Ft. Lauderdale where a decrease of 26% led to average luxury home prices of $2.689 million.
Not all price decreases are indicative of a slowing market, however. Miami, as just one example, has seen explosive growth in new construction for high-end homes. But it did see a decrease of 15% to $1.743 million last quarter. However, as these two charts from the appraisal firm MillerSamuel show, there are more condo sales than those of single family homes.
Miami sales by price. Click to expand.MillerSamuel
When looking at the price trends by housing type prices for condos are increasing while those for single-family homes are decreasing. Since condos tend to cost less than houses the price decrease could just be a symptom of a shift in market share of the housing stock.
Miami sales by property type. Click to expand.MillerSamuel
For the full analysis, go to the Redfin report here.
Related on Forbes: How To Invest In Florida Real Estate
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