In the US, sales of luxury homes plummeted 28%, while regular market sales fell 19.5% as federal interest rates surged. inflation runaway
Luxury home sales saw their biggest year-over-year decline in August since the pandemic brought the housing market to a halt in 2020, with sales down 23.2%. redfins Latest report.
Sales fell across all of the country’s top 50 metropolitan areas, with the biggest drop in Auckland. California, 63.9 percent. San Jose, Calif. he is 59.6%. Miami is 55.5%, San Diego is 55.3% and Seattle is 52%.
Portland; Nassau County, New York; Washington D.C., new york citySt. Louis and St. Louis all experienced the least decline in luxury home sales.
Meanwhile, in the non-luxury market, San Diego. San Jose; Anaheim, California; Phoenix; and Washington, D.C. saw the biggest declines in sales.
The biggest changes have been concentrated in the West Coast metropolitan areas, where markets have been impacted by expensive housing, rising crime, and a massive exodus of citizens deterred by warnings of a looming recession. The rise of a work-from-home culture has allowed West Coast tech workers to move to more affordable cities.
Big cities like Austin, Washington D.C., and Miami were also affected as they were popular getaway destinations during the height of COVID, but as the pandemic subsided, many people returned.
Redfin chief economist Darryl Fairweather said the recent plunge was fueled by rising interest rates, inflation and the recent rise in mortgage rates.
“People looking for luxury homes are shocked to see the impact of rising mortgage rates on paper,” Fairweather said. Higher interest rates can equate to thousands of dollars higher in monthly housing costs.”
“Someone who was on the market for a $1.5 million home last year could now have a maximum budget of $800,000 due to rising mortgage rates,” he added. “When times of uncertainty force people to rethink their finances, luxuries are often the first thing cut.”
The biggest year-over-year declines in both luxury and non-luxury sales were concentrated in California and the West.
U.S. luxury home sales fell 28.1% year-over-year in August, surpassing the record drop of 23.2% in June 2020.
Oakland, California saw the biggest drop in luxury home sales, down nearly 64%.The number of new properties like his $5.6 million home above has dropped 50%
Prices for luxury homes fluctuate in cities across the United States. Photo: Miami home prices were $7.1 million in July, down $1.8 million from a year earlier.
San Francisco luxury home sales fell 49.6%. Prices for luxury homes (above) rose 14.5% he said, but the market shrank and listings fell 21.5%.
Photo: An $8 million home in Seattle has been slashed by $1 million as luxury home sales dwindle.
Auckland, where luxury home sales fell the most, averaged $3.15 million for luxury homes in August, about 21.3% higher than last year.
However, as sales declined, the number of active listings fell by more than 40% last year, and the number of new listings fell by nearly 50%.
This has led to price volatility across the market, dropping some luxury homes by more than $1 million.
San Diego, the leading non-luxury market, had an average listing price of $860,000 in August, up 16.2% from last year.
Similar to Oakland, San Diego’s active listings fell 25% last year, while the number of new listings plummeted 32.8%.
Prices are soaring, but Miami real estate agent Sam Shute said sales prices were slowing after the pandemic-induced home-buying frenzy.
Year-over-year, luxury home prices rose by only 10.5%, about half of the previous year’s 20.3% increase.
“Luxury home prices have skyrocketed so much that many buyers feel they can’t justify their purchases,” Shute said.
“Some homes that would have sold for $5 million before the pandemic are now priced at $10 million or more, even though they have received only minor cosmetic updates. In a chilling market, it’s a tough pill to swallow for today’s buyers.
Luxury home price increases have slowed significantly for both luxury and non-luxury homes as the market cools.
In Las Vegas, luxury home sales plummeted 50% year-over-year, with new listings down 7%.Photo: $2.2 million luxury home with outdoor pool
In Seattle, the average luxury home price was $2.7 million, as noted above, but August home sales were down 52% year-over-year.
Seattle’s housing market is slowing faster than any other in the nation, new research reveals – as cash-strapped buyers become increasingly hesitant to buy homes.
Economists at Goldman Sachs recently warned that house price growth is expected to stall completely across the United States next year due to declining demand and too many properties to buy.
Moody’s Analytics chief economist Mark Zandy warned last month that if a recession hits, house prices could fall by up to 20% next year, and prices are overvalued by up to 72% in some countries. did.
The new housing crisis comes after a period of relative affordability seen during the pandemic in 2020 and last year. This is because mortgage rates are at record lows. This is despite the fact that prices have also risen during that time period to accommodate increased demand.
But this year, just before the Fed decided to raise rates to combat record inflation, banks hiked mortgage rates significantly to cover potential losses in an expected recession. rice field.
In its biggest one-week gain since 1987, the most popular mortgage package, the 30-year fixed-rate mortgage, rose to 5.78% in June from 5.23% at the end of May.
It has since reached an even more pronounced 6% as of September.
A year ago, the affordability rate was less than half of what it is today, at 2.9%.
Interest rates on 30-year mortgages are at their highest levels since the October 2008 housing market crash, triggering the Great Recession.
Latest Hikes Bring Fed Rates (Since 1980) to Highest Level Since 2008 Financial Crisis
Earlier this month, the Federal Reserve raised interest rates for the fourth time by another 0.75 percentage points to keep inflation in check.
This was the third consecutive rise of 0.75 points and the largest rate hike the Fed has done in over 20 years.
The Federal Reserve’s move in September pushed the benchmark short-term interest rate, which affects many consumer and business loans, into the 3% to 3.25% range, the highest level since early 2008.
Fed officials expect to raise the benchmark rate further to around 4.4% by the end of the year.
And they expect that rate to rise to around 4.6% next year. This is the highest level since 2007.