Photo by James Sanna | Banker & Tradesman Staff
Luxury home values are on the rise in the United States according to new data released from Zillow, particularly in Boston where luxury home values increased 5.8 percent year over year last month.
Nationally, luxury home values are only up 3.9 percent
“Luxury homes can be challenging to sell because the pool of buyers is so much smaller. That’s one reason prices for them usually grow more slowly,” said Anushna Prakash, economic research scientist at Zillow. “We’re seeing a different trend play out this year. Luxury home buyers are likely less affected by higher mortgage rates than a typical buyer, especially repeat buyers who saw their home equity soar over recent years. Many will be able to pay with cash and skip a mortgage payment altogether.”
However, the recent data from Zillow shows that luxury for-sale inventory is increasing in Greater Boston, with the combined total of single-family and condominium listings in the top 5 percent of the market by price having risen 13.7 percent year-over-year. The median luxury home value in the region currently sits at $2,698,471, Zillow said. Despite this, the number of luxury listings with a price cut in Boston are slightly down, by less than 1 percent.
Interest rate cuts are also on the horizon with cuts possibly coming in the fall, which could help energize the market.
Zillow’s data comes at a time when it seemed the luxury market was cooling off. The number of luxury condominium sales in Boston was down 20 percent for the first three months of this year, according to a report from The Collaborative Cos.
Sue Hawkes, managing director at TCC, credited a lack of supply and the interest-rate environment for the drop-off in sales in an interview with Banker & Tradesman last month. The report from TCC also noted that the average price per square foot and average sale price of a luxury condo building in Boston were down 7 percent and 3 percent in the first quarter of the year, respectively.
The report credits the slowdown in construction and shallow pipeline as the drivers behind rising prices. Only 556 luxury units are under construction or in various stages of planning according to TCC.
