Reposted from Forbes | Dima Williams, Contributor | June 25, 2020
Similar to the wider U.S. housing market, which is bouncing back from the early, dampening effects of the coronavirus pandemic, the luxury segment recorded a promising uptick in entry prices, demand and inventory, according to a report by listing website Realtor.com.
Defined as the top 5% of homes listed, the upscale housing sector saw the listing price entry point across the nation grow 6.1% year-over-year to $2.97 million. As more luxury residences hit the market in May compared to April, their higher prices led the overall housing market’s median price gain of 1.6% last month from a year ago, Realtor.com says in its luxury housing report released today.
“The Covid-19 pandemic has reinforced the resilience of the housing market and unlike prior downturns, the luxury market is leading the recovery,” Realtor.com’s Chief Economist Danielle Hale said in a press statement.
Nonetheless, only 25 of the 94 luxury markets Realtor.com tracks have posted increases in their asking prices since January, when the high-end segment finally gathered momentum after a rocky 2019, which was largely deemed as a year of correction in the amounts affluent sellers expected for their abodes.
Luxury home supply continues to lag, while demand spikes
In May, demand for multi-million residences outpaced its pre-pandemic trajectory, even if it experienced a considerable slump in April. Searches for upscale homes spiked 7.3% year-over-year last month, compared to a 9.5% drop in April and a 6.2% growth before the virus outbreak.
As is the overwhelming case in the larger housing industry, the stock of for-sale high-end abodes lagged behind demand. Yet, on a monthly basis, supply did improve considerably. New listings for homes priced above $1 million were down 15.1% year-over-year in May. This contrasts with the 57.8% annual decrease in April. The $1 million and up residences that were on the market took 89 days to find new owners in May or roughly two weeks longer than a year ago.
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