By John Burns, CEO
Luxury home sales have increased, contrary to the opinions of most Wall Street analysts and press reports. Here are the facts:
- Sales of homes priced above $600,000 have risen in 37 of the 43 counties where we purchased the data.
- Home sales above $600,000 in the last 12 months exceed sales in the prior 12 months by 10%.
- Home sales in Q3 2016 exceeded sales in Q3 2015 by 5%.
- Sales have increased in every price increment from $600,000 to $1.5 million+.
See the charts below—and then our explanation of why Wall Street has it wrong.
Source: CoreLogic; John Burns Real Estate Consulting, LLC (Data: Sep-16, Pub: Dec-16)
Source: CoreLogic; John Burns Real Estate Consulting, LLC (Data: Sep-16, Pub: Dec-16)
Why Is the Common Perception Wrong?
A confluence of five high-profile events has conspired to give the wrong perception:
- New disclosure laws. Foreign-buyer activity has slowed in two high-profile markets, Manhattan and Miami, due to threat of enforcement of new disclosure laws that began in 2016.
- High-profile Florida second-home markets. High-priced homes have indeed slowed in two of the highest-profile second home markets in the country, Naples (Collier County) and Palm Beach. These are two of the six counties where sales have declined.
- Fortune article on Greenwich, CT. The sales slowdown in high-profile Greenwich, CT, was featured in Fortune magazine. The article included some very misleading headlines about a national luxury slowdown that were supported only by the fact that prices have appreciated 5% at the high end compared to more appreciation at lower prices.
- Increased $1 million new-home supply. New-home sales have slowed in a few new-home markets due to a surge in competitive supply. Coupling this surge in supply, builders have pushed prices too high in comparison to the resale competition due to rising costs.
- Improving entry-level sales. Entry-level sales are also improving at a faster rate than higher-priced home sales. Indeed, the market for lower-priced homes is stronger, but that does not mean that luxury sales are struggling.
Summary
In conclusion, luxury home sales continue to increase. Entry-level home sales continue to increase even faster.
