A newfound appetite for home offices, more space and bigger backyards that has emerged from the coronavirus pandemic and its resulting lockdowns, is driving up luxury home prices in the U.S., according to a report Wednesday from Redfin.
The median sale price for luxury homes in the U.S., defined as the top 5% of the market, rose 1.2% year over year to $825,000 during the three months to July 31, the real estate brokerage said.
In comparison, during the three months to June 14, luxury prices fell 2.3% year over year, according to a past report from Redfin.
"This pandemic-induced recession is unlike any past recession, and its effect on luxury housing is similarly incomparable," Redfin chief economist Daryl Fairweather, said in the report. "Now, more than ever, homebuyers are seeking out features long associated with luxury homes, like spacious yards, home offices, gyms and private swimming pools.”
“That shift in buyer preferences means the luxury housing market isn't suffering like it has in past recessions, when homebuyers mercilessly cut their budgets,” Ms. Fairweather added.
Median sale prices of high-end homes rose in 35 of the 49 metro areas the report analyzed, bolstered by a handful which recorded particularly significant gains.
Miami led the pack, where median high-end home prices increased 10.2% year over year to $1.95 million.
"Almost all of the luxury buyers I'm seeing in Miami today are from out of state—Los Angeles, New York City or Chicago. A lot of the snowbirds who used to commute between here and New York can no longer travel due to the pandemic, so they've just decided to stick around," Maria Garcia-Gonzalez, a Miami-based Redfin agent, said in the report. "Why spend $4 million on a tiny apartment in New York when you could get a beautiful mansion on the water here for the same price?"
Luxury price gains in New Brunswick, New Jersey, and Phoenix, Arizona, followed, up 9.1% and 9%, respectively.
The largest fall in luxury prices was seen in Anaheim, California, where values fell 5.8% year over year. It was followed by Seattle and Cincinnati, down 3.6% and 3.5%, respectively.
Looking ahead, the recent gains in the stock market—where high-end home buyers typically hold much of their wealth—could lead to a further strengthening of the luxury market, the report said.