U.S. luxury home sales increased 41.5% year-over-year in the third quarter, according to a new report from Redfin.
That’s the largest jump since at least 2013, when Redfin began recording this data.
Meanwhile, sales of medium-priced homes climbed just 3%, and sales of affordable homes declined 4.2%, underscoring the coronavirus pandemic’s disparate impact on Americans with lower levels of wealth.
“The luxury housing market normally takes a hit during recessions as wealthy Americans tighten their purse strings, but this isn’t a normal recession,” explains Daryl Fairweather, chief economist for Redfin, in a statement. “Remote work, record-low mortgage rates and strong stock prices during the pandemic are allowing America’s wealthy families to gobble up expensive houses with home offices and big backyards in the suburbs.
“Meanwhile, scores of lower- and middle-class Americans have lost their jobs or are still renting in the city because they’re essential workers and have to commute into work, so they’re unable to reap the benefits of homeownership.”
A handful of West Coast metro areas fueled the surge in luxury home sales during the third quarter. In Sacramento, luxury sales soared 86.1% from a year earlier, more than any other major metro. Rounding out the top three were two other California metros: Riverside, Calif., and Oakland, Caif., up 62.8% and 60.9%, respectively. Portland, Ore. (+60.6%) and West Palm Beach, Fla. (+59.7%) also saw sizable gains.
“It’s well known in the real estate world that luxury properties typically take longer to sell, but this may be starting to change,” says Kelly Crocker, a real estate agent in Sacramento, Calif. “Sacramento has always been a popular landing place for transplants from crowded cities, but now with the pandemic and record-low mortgage rates, it’s becoming an even bigger hotspot for people who have the means to move.
“We’re seeing a lot of tech workers sell their expensive Silicon Valley homes and come out here in search of more space and more bang for their buck,” Crocker adds. “A number of my buyers have been eyeing the Sacramento suburbs for a while, but are just now pulling the trigger because rates are low and they no longer need to commute into work.”