The lavish lifestyle provided by cities like San Francisco and Seattle may no longer be a selling point as luxury home prices dropped significantly in recent months.
The Golden State broke a record, according to Redfin which analyzed the 50 most populous U.S. metropolitan areas, with the median sale price of luxury homes falling 12.7 percent, dropping to $4.8 million in the second quarter. Numbers indicate a major drop in the cities’ market compared to a record high of $5.5 million reached only a year earlier, according to Fox Business.
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Meanwhile, Seattle came in second place with the biggest drop in the country as median sales prices for luxury homes in this area fell a record 12.3 percent, ($2.5 million).
Oakland and San Jose also saw head-turning drops in home prices, falling 11.3 percent and 10.3 percent. Redfin reported the cities were “disproportionately impacted by stock-market declines and tech layoffs, which have diminished buying power for high-end house hunters.”
One potential factor influencing the decline in luxury home prices is the increase in housing supply within the city. But, another factor why longtime residents and businesses moved out of these cities could be the surge in violence and crime.
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Despite a drop in luxury home prices in certain local markets, the broader nationwide trend tells a different story.
Redfin data reveals that overall luxury sale prices across the country increased compared to the previous year. The median sale price of high-end homes increased by 4.6% year over the course of one year, reaching a record high of $1.2 million during the second quarter, indicating positive performance for the luxury real estate market.
Redfin Chief Economist Daryl Fairweather noted that “wealthy buyers are also more likely to pay in cash, meaning they’re less likely to be deterred by elevated mortgage rates.”
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