An increase of more than 2% was noted by luxury home sales at USA in Q1 2024, posting its biggest year-over-year gains in three years, according to Redfin.
However, as mentioned by the CNBCtotal home sales fell 4% nationally, as with mortgage rates above 7% for a 30-year fixed loan, most prospective buyers find prices unapproachable.
Still, affluent buyers buy homes with cash, which makes them less vulnerable to high interest rates. Nearly half of the luxury homes listed by Redfin in the top 5% of neighborhoods were purchased in the first quarter with cash.
This rate is the highest recorded in at least a decade, and according to Miller Samuel, especially in Manhattan, cash deals reached a record 68% of all sales.
At the same time, this “flood” of cash is driving prices sky high. Prices for the average luxury home rose nearly 9% in the quarter, roughly double the growth seen in the broader market. According to Redfin, during the same period the average price of luxury homes reached all-time record of $1,225,000.
“Those who can afford luxury homes are doing so now because they think prices will continue to rise,” said David Palmer, a Redfin real estate agent in Seattle, where the average luxury home sells for $2.7 million.
The luxury home market is also being supported by an increase in the supply of homes for sale. According to Redfin, the number of luxury homes for sale increased by 13% in the first quarter, compared to a 3% decline for the rest of the housing market.
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