The St. Regis Residences luxury tower is seen framed by elements of the Seaport Place development. The recently-completed Seaport District building is one of three large condominium complexes that market-watchers say has helped pile inventory into the city’s high-end housing market. Photo by James Sanna | Banker & Tradesman Staff

Owners of luxury homes in Boston can take solace in this fact: At least they’re not in San Francisco or Seattle. 

A new report from Redfin shows that luxury housing in the Boston metro area is definitely underperforming in prices compared to non-luxury homes in the region. 

According to Redfin data, median sale prices for luxury housing in Boston increased by only 0.5 percent, to $2.21 million per unit, in the second quarter, compared to a 3.4 percent rise, to $671,800, in median non-luxury prices in Boston during the same time period. 

The decline in overall inventory – as measured by both active and new listings – was actually lower for luxury homes in the Boston market, compared to non-luxury housing, according to Redfin data.  

Meanwhile, the declines in second-quarter sales were roughly the same for luxury and non-luxury homes, respectively, at 25.29 percent and 27.4 percent, data shows. 

The median days on the market for luxury units was 21 days in Boston, compared to 18 days for non-luxury units, according to Redfin.  

Redfin’s study defined “luxury” housing as the top 5 percent of the for-sale housing market the metro area by price, single-families and condominiums combined. 

Andrew Haigney, principal broker at Batterymarch Group in Boston, said it’s clear that the local luxury market has been hampered by rising interest rates that have made transactions more expensive for buyers. 

“Things have been very, very slow,” said Haigney, whose sales territory includes the Back Bay, Beacon Hill, South End and Seaport areas of Boston.  

More Supply, Less Buying Power 

Helping to tamp down luxury prices has been the small flood of new high-end products coming on the market over the past three quarters in Boston, including about 600 units at the new St. Regis Residences in Seaport, the Winthrop Center in the Financial District and Raffles on Stuart Street, he said. 

“They’re all competing against each other,” Haigney said, noting that other recent luxury developments, such as 2021’s Echelon Seaport and 2019’s One Dalton, still have units for sale on the market. 

Sue Hawkes, managing director of Echelon and Raffles Boston listing brokerage The Collaborative Cos., said demand for luxury units has been hurt by rising interest rates that have made transactions more expensive.  

“They’ve reduced the purchasing power significantly for many people,” she said of higher mortgage rates. 

National apartment developers have reported strong demand for their rental units in Greater Boston, driven by well-paid professionals who were nonetheless priced out of the local housing market. 

She added it’s “logical” that the non-luxury market, in terms of prices, has fared better than the luxury market, due to the huge demand for less-expensive properties in the Boston area. 

Despite completing in 2021 and recording rapid sales, the Echelon Seaport development between Boston’s Congress Street and Seaport Boulevard still has units unsold, real estate industry figures say. Photo by James Sanna | Banker & Tradesman Staff

Michael Carucci, a Realtor and executive vice president at Gibson Sotheby’s International Realty, said his data paints a slightly different picture of the luxury housing market in Boston, compared to data used by Redfin. 

According to his MLS research, there were 98 single-family and condo units sold over the past year, valued at more than $4 million each, compared to 124 sold units the year prior, Carucci said. 

Meanwhile, the median sale price for the same $4 million-plus category of units was $5.59 million, down about 0.3 percent from the prior year. 

But he said the median price per square foot for luxury properties in Boston actually increased to $2,349 per square foot, up 15.8 percent compared to the year prior. 

The bottom line: The luxury market in Boston may be experiencing a slowdown, with limited inventory available, but prices remain surprisingly stable, Carucci said. 

“It seems pricing [at the luxury level] has reached a saturation point,” he said.  

Potential for an Early Rebound? 

And then there are the comparisons to San Francisco and other coastal cities. 

According to Redfin, the median sale price of luxury homes in San Francisco plunged 12.7 percent, to $4.8 million, in the second quarter, compared to the year prior. That was the largest price fall among the 50 most populous metropolitan areas in the U.S., according to Redfin. 

Three other tech-oriented cities on the West Coast also experienced major price declines in the second quarter, including Seattle, where luxury housing fell by 12.3 percent to $2.5 million, according to Redfin. 

Daryl Fairweather, chief economist at Redfin, said all luxury markets across the country have been hurt by rising interest rates and economic uncertainties.  

But San Francisco was especially hit hard during the recent pandemic, as remote work took off and people increasingly sought homes in more open non-urban areas. 

“San Francisco had an exodus of people,” Fairweather said. “People are kind of shunning San Francisco.” 

Meanwhile, other coastal cities in the Northeast, including New York and Boston, weren’t hit as hard by the pandemic, she said. 

“The Northeast didn’t experience big market swings like San Francisco and other cities,” she said. “The market has been more stable in places like Boston.” 

If anything, Fairweather said, Redfin’s data points to a possible early-stage recovery of the luxury market in general across the county, though not necessarily in places like San Francisco.  

“If you look at the current trends, the worst may be behind us,” said Fairweather, who stressed there’s still plenty of economic uncertainties at play. 

Carucci said he’s not surprised Boston’s luxury market, despite its problems, is doing better than San Francisco, largely due to Boston’s diverse economy driven by the finance, tech, health care and life sciences sectors, he said. 

“Boston is still considered a top international market,” he said. “If properties are priced right, they will move. Well-priced homes are still selling.” 

He added that Boston may have experienced a building boom in recent years, but it never became an overheated market.  

“Compared to other cities, we’re in healthier shape than most,” he said