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Luxury home sales down for first time in two years


Economic instability both overseas and on Wall Street may have impacted a drop in high-priced home sales, according to new data from real estate brokerage Redfin.

The Seattle-based company reported the sales volume of homes priced at $2 million or more dropped by nearly 4 percent year over year in fourth-quarter 2018. It’s the first time in more than two years that home sales at that price point declined on an annual basis.

LuxuryHomePart of the price decline is due to a simple inventory issue: There were 6.5 percent fewer homes priced at $2 million-plus on the market in the past fourth quarter compared to the same period a year earlier. It was the seventh consecutive quarter that supply has declined annually — a contrast to the supply of homes priced under $2 million, which has trended sharply upward since early 2018.

Prices, meanwhile, continue to rise. In fourth-quarter 2018, the average sales price for luxury homes (defined by Redfin as those among the 5 percent most-expensive homes sold during the quarter) rose 4.7 percent year over year to an average of $1,772,000. That’s up from 3.2 percent growth in the past third quarter.

Redfin theorizes that other factors also may be at play.

“In the fourth quarter of 2018 there was a lot of economic uncertainty — mortgage interest rates peaked in November, and the stock market was all over the place. This may have encouraged luxury sellers to hold on to their real estate assets and also caused luxury buyers to be reluctant to make major home purchases,” Daryl Fairweather, Redfin’s chief economist, said on the company's website. “There’s also economic uncertainty abroad. For example, China’s economy slowed down at the end of 2018, which may be affecting a segment of U.S. luxury sellers and buyers whose wealth is invested overseas.”

“It’s worth noting,” Fairweather added, “that when we’re examining the most expensive segment of the housing market nationwide, a disproportionate amount of the movement seen in prices and sales is driven by activity — or lack thereof — in major expensive coastal markets like San Francisco and San Jose [California], where sales fell by double digits while price growth slowed or reversed at the end of the year.”

Questions? Contact Arnie Aurellano at (425) 984-6019 or arniea@scotsmanguide.com. 


 

Questions? Contact at (425) 984-6019 or arniea@scotsmanguide.com.

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