Luxury home sales have increased, contrary to the opinions of most Wall Street analysts and press reports. Here are the facts:
- Sales of homes priced above $600,000 have risen in 37 of the 43 counties where we purchased the data.
- Home sales above $600,000 in the last 12 months exceed sales in the prior 12 months by 10%.
- Home sales in Q3 2016 exceeded sales in Q3 2015 by 5%.
- Sales have increased in every price increment from $600,000 to $1.5 million+.
See the charts below—and then our explanation of why Wall Street has it wrong.
Why Is the Common Perception Wrong?
A confluence of five high-profile events has conspired to give the wrong perception:
1. New disclosure laws. Foreign-buyer activity has slowed in two high-profile markets, Manhattan and Miami, due to threat of enforcement of new disclosure laws that began in 2016.
2. High-profile Florida second-home markets. High-priced homes have indeed slowed in two of the highest-profile second home markets in the country, Naples (Collier County) and Palm Beach. These are two of the six counties where sales have declined.
3. Fortune article on Greenwich, CT. The sales slowdown in high-profile Greenwich, CT, was featured in Fortune magazine. The article included some very misleading headlines about a national luxury slowdown that were supported only by the fact that prices have appreciated 5% at the high end compared to more appreciation at lower prices.
4. Increased $1 million new-home supply. New-home sales have slowed in a few new-home markets due to a surge in competitive supply. Coupling this surge in supply, builders have pushed prices too high in comparison to the resale competition due to rising costs.
5. Improving entry-level sales. Entry-level sales are also improving at a faster rate than higher-priced home sales. Indeed, the market for lower-priced homes is stronger, but that does not mean that luxury sales are struggling.
Summary
In conclusion, luxury home sales continue to increase. Entry-level home sales continue to increase even faster.
*We purchased new and existing home sales data in 43 counties in 16 states (AZ, CA, CO, FL, GA, IL, MN, NC, NJ, NV, NY, OR, PA, TN, VA, and WA) where new home construction is high. Our sample was not biased for this story. Data was not available in Texas, and data through September was not available everywhere. Every market and submarket is different.
