Although the real estate market from coast to coast has tapered off, one sector of the housing market that is still surging is in luxury home sales during the third quarter.
Robert Frank of CNBC wealth reporting claims high demand, low inventory and higher prices are the main driver for the higher-end residential homes sales in Q3.
Homes listed at $1 million or more showed sales increased 9 percent in Q3 compared to the same period in 2013, based on data from real estate research firm, Redfin. What’s more, sales of homes priced at $5 million and above rose 18 percent from the previous 12 months. Those are extremely healthy numbers and can be partly attributed to more super jumbo lending choices. Lenders view borrowers in this price category as less risky in terms of default than conforming borrowers.
In contrast to higher-end home sales, sales of all residential homes in major housing markets monitored by Redfin decreased by 1.2 percent.
Many areas of the country, housing inventory at the high-end is still low, especially in areas of high demand such as the San Francisco Bay area or the greater Los Angeles area and coastal regions. Sales of homes in luxury ZIP codes for $1 million or more has fallen by 13 percent from a year ago. For those homes costing much more than that such as mansions and estates, the available supply is down even further. As an example, sales of $5 million-plus homes in luxury ZIP codes is less by 47 percent from the previous year.
In the third quarter, the three most expensive sales each exceeded $25 million. The most expensive was a home in Malibu, California, at $33.5 million.
In second place was a 7-bedroom, 10-bathroom French style mansion with 16,474 square feet of living space and an excellent view of Biscayne Bay in Indian Creek, Miami which sold for $28 million (a 20% discount as it was listed for $35 million listed by Nelson Gonzalez of EWM Realty International)
Coming in third was a three parcel home owned by Oscar-winning actor, producer, and director Ron Howard with an indoor pool, theater room, observatory, greenhouse, and tennis court located in Armonk, New York sold for $27.5 million to an anonymous foreign buyer (source: Westchester magazine )