Don’t drink any water right before reading this: A home sold in Los Angeles for over $94 million last year. And that’s just the tip of the iceberg. Luxury home prices rebounded in the fourth quarter of 2019 after a less than stellar start in the beginning of last year. Year-over-year, the luxury market grew 1.6 percent in 2019, raking in $1.63 million altogether, according to a report by Redfin. Experts say that increased demand is pushing the prices up, and although they do not know the exact trajectory for the market, they expect the price gains to continue in 2020. This is good news for luxury home builders after concerns that the luxury market was stalling earlier this year.
The average sale price for luxury homes nationwide climbed 1.6% year over year to $1.63 million in the fourth quarter of 2019, a rebound that marks the largest gain since the third quarter of 2018. Still, while this increase represents an improvement from the 4% drop in the first quarter of 2019, it hasn’t yet returned to the outsized growth of recent years.
For this analysis, Redfin tracked home sales in more than 1,000 cities across the U.S. (not including New York City) and defines a home as luxury if it’s among the 5% most expensive homes sold in the quarter. While luxury prices inched upward in the fourth quarter, homes in the other 95% of the market saw prices increase 5.2% annually to an average of $317,000, the third-consecutive quarterly gain.
Sales of homes priced at or above $1.5 million rose 11.2% in the fourth quarter, marking the second-consecutive increase following three quarters of declines. Sales of homes priced below $1.5 million climbed 6% year over year.
