But super high-end real estate continues to falter across the country
It was a tale of two counties in South Florida this summer as luxury prices in Palm Beach skyrocketed, but in nearby Miami they tumbled 10% amid a glut of high-end condos on the market, according to a report out Tuesday.
Delray Beach in Palm Beach County topped real estate brokerage Redfin’s luxury house price index, which tracked luxury sales in more than 1,000 cities across the U.S. in the third quarter. The report defines a home as “luxury” if it is among the top 5% most expensive homes sold in each city.
The average price of a luxury home in Delray Beach jumped 70% over the past year to stand at $2.98 million. In second place was Boca Raton, which saw prices rise 38% to $2.59 million, while in West Palm Beach they were almost 22% higher at $1.32 million.
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The boom in luxury prices is down to new building in waterfront areas and the reurbanization of downtown areas, according to Alex Garcia, a Redfin agent in Palm Beach County.
“We are seeing builders tearing down older homes on waterfront and water-accessible properties and rebuilding with all the bells and whistles of a modern property,” Mr. Garcia said.
“Luxury buyers in Delray and Boca are drawn to single-family homes with water access, but also proximity to revitalized downtown areas with trendy restaurants and shopping. While vacation homes make up some of our luxury market, we also have a lot of affluent buyers who live here as a primary residence.”
Boston, Seattle and San Francisco also saw luxury home prices grow 20% in the third quarter. The former is undergoing its biggest residential boon since the 1920s, drawing the attention of wealthy house-hunters who would traditionally stick to New York, Miami, Los Angeles and San Francisco. Seattle, meanwhile, is attracting wealthy tech industry workers thanks to many companies setting up shop in the West Coast city.
In contrast, luxury prices in Miami tumbled 10% over the past year to an average of $1.4 million on the back of a glut of expensive condos on the market. While the overabundance of luxury condo inventory in Miami is not a new story, Redfin agents predict that prices will continue to remain soft as long as buyers have lots of choices and negotiating power.
Overall, Redfin found that sales of homes priced above $1 million in the U.S. increased 6.8% in the third quarter from a year earlier despite economic and political uncertainty in the run up to the U.S. election, while luxury home prices rose 1.4% over the same period.
However, the headline figures masked the fact that the $5 million-plus bracket is slowing down amid weakening demand and an oversupply of these homes on the market. Sales of homes priced above $5 million were mostly flat, inching up a mere 0.4%, while inventory increased 17.2%.
“The super high-end homes are particularly out of sync with the rest of the market and seem to be bending toward a price correction given the tepid sales growth and double-digit pop in inventory at price points over $5 million,” said Nela Richardson chief economist at Redfin.