Luxury homes have gone up 9 percent in price in the last 12 months, data showsExperts say trend is driven by surge in cash buyers as affluent buyers dodge high mortgage rates The median cost of a luxury home in America is now $1.1 million
Luxury homes have gone up 9 percent in price over the last year, vastly outstripping the growth of non-luxury sales, new analysis shows.
Experts said the trend is being driven by a boom in wealthy buyers paying for homes in cash to avoid elevated high mortgage rates. The average rate on a 30-year fixed rate mortgage is hovering just below 8 percent – deterring many homeowners from moving.
Data from property portal Redfin shows the median sales price of a luxury US property rose to $1.1 million in the third financial quarter – while the cost of a non-luxury home climbed 3.3 percent to $340,000.
Researchers defined ‘luxury home’ as a property within the top 5 percent of their respective metro area based on market value. So-called ‘non-luxury homes’ are those estimated to be in the 35th and 65th percentile of the market.
Redfin’s senior vice president of real estate operations Jason Aleem said: ‘Wealthy homebuyers have more tools to weather the storm of high mortgage rates.
‘Many of them can afford to pay in cash, meaning they’re escaping high mortgage rates altogether. Others are choosing to take on a higher rate and refinance later—an expensive option that isn’t feasible for a lot of lower-income consumers.’
He added that affluent Americans were still spending thanks to large pandemic savings and their resilient housing and stock values.
Some 43 percent luxury home purchases are now paid for in cash, up from 35 percent