Bay Area, Miami, Las Vegas have seen largest increase in "expensive" home purchases
Home sales on properties labeled as “expensive” or “high-end” have skyrocketed in California’s Bay Area, Miami and Las Vegas in 2021, and overall purchases of high-end homes in the country jumped 26% year over year during the three months ending April 30, according to a recent study from Redfin.
“Affordable” and “mid-priced” home purchases rose 17.8% and 14.8% year over year, respectively.
Redfin classified high-end homes as being sold for at least $440,000; mid-priced homes as being sold for at least $280,000; and affordable homes as being sold for at least $189,500, all during the three month period ending April 30.
Listings of high-end homes rose 19.3% year over year during the three months ending April 30, outpacing a 13.9% gain in affordable listings and a 9.1% increase in mid-priced listings. The typical high-end home for sale during the three months ending April 30 spent 26 days on the market — 23 fewer days than the same period in 2020. Affordable homes spent 24 days on the market (12 fewer days than a year earlier) and mid-priced homes spent 20 days on the market (18 fewer days than a year earlier).
Homes in every price tier are selling in less than four weeks, per the study.
San Francisco saw an 82.4% rise in purchases of expensive properties during the three months ending April 30 — the biggest gain among the 50 most populous U.S. metropolitan areas. Next came Oakland, California (+71.8%), Miami (+70.4%), San Jose, California (+66%) and Las Vegas (+64.4%).
Phoenix was the top destination for Redfin.com users looking to move to a different area in April, with Austin and Miami not far behind.
In Texas, Houston, Dallas and San Antonio all saw at least a 40-day decrease in the median number of days on the market for high-end homes during year over year. In the entire country, no metro had a larger decrease in median number of days on the market for high-end homes than New Brunswick, New Jersey (45 day decrease) year over year.
For the three month period ending April 30, all three tiers of homes in Denver stayed on the market for an average of only four days — a testament to the current popularity of Colorado with prospective buyers.
Redfin Chief Economist Daryl Fairweather said high-end sales growth in Florida is being fueled by an influx of affluent out-of-staters, while the gain in the Bay Area is more of a recovery from the massive decline in sales the region experienced at the start of the pandemic when scores of Americans left big cities in search of areas of the country with more, less expensive space.
“Growth in high-end-home sales is currently skewed toward some of the most expensive markets in the country, like the Bay Area and parts of Florida, which is fueling an uptick in high-end home prices,” Fairweather said. “Folks may be starting to feel more comfortable putting down roots in major hubs now that they’re gaining clarity on post-pandemic life.“
Sales of “luxury homes” rose 41.6% year-over-year in the first quarter of 2021, crushing sales of affordable homes (7% increase) and mid-priced homes (5.9%), per an April report from Redfin. Redfin defines “luxury” homes as selling for an average of $975,000.
The largest increase in luxury-home sales in the first quarter was Miami, with sales up 101.1% from a year earlier. Miami was followed by San Jose (up 92.3%), Oakland (up 82%), and Sacramento, California (up 79.3%) and Las Vegas (up 72.7%).
Lack of inventory, a national housing issue following the onset of the pandemic, isn’t an issue for luxury homes. In fact, the number of luxury homes for sale fell only 5.1% year over year in the first quarter, the smallest decline of all five price tiers. The supply of affordable homes for sale, however, slumped 14.9%, and the supply of mid-priced homes dipped 19.8%.
“[Selling] isn’t as big of an issue for luxury homeowners since there’s a relative abundance of high-end homes to choose from,” Fairweather said.