A big drop for high-priced homes
May 08, 2019 - United States
The average price of luxury homes in the United States fell in the first quarter of 2019, representing the first annual decline of luxury home prices in three years.
A Redfin report revealed that the average price of luxury homes across 1,000 cities (excluding NYC) fell by 1.6% to $1.55 million.
Redfin defines a home as “luxury” if it was among the 5% most expensive homes sold in a quarter.
By contrast, home prices in the other 95% of the market rose by 2.7% year-over-year to an average of $300,000 in the first quarter of 2019, following six straight years of increases.
Additionally, sales of homes priced at or above $2 million fell 16% year-over-year last quarter, marking the second consecutive quarter of declining sales and the biggest luxury sales drop since 2010.
Daryl Fairweather, chief economist at Redfin, pointed to tax reform measures that lowered the limits on deductions for mortgage interest as one of the main reasons for the decline in luxury home prices.
"Because homeowners can't deduct as much mortgage interest as they used to be able to, the calculus has changed when it comes to buying a home, especially an expensive one," said Fairweather.
"Not only do the new rules make it less desirable to purchase a multi-million dollar home in high-tax states, it has also motivated some people – especially those with big incomes and big housing budgets – to consider moving to places like Florida, Washington or Nevada, which have no state income tax."
Photo : 277 St Pierre Rd, Los Angeles - listing courtesy of Joyce Rey, Coldwell Banker Residential Brokerage
Trends, Luxury Home Prices, real estate prices