Home Prices in the luxury real estate market has experienced a 2.2 percent decline year over year, while the remainder of the market has seen an increase of 3.8 percent.
According to the press release of Redfin in Business Wire, the decline of luxury home prices can be attributed to the stepping down of wealthy buyers and foreign investors due to volatility in the global markets, and the fear of prices have quickly climbed too high. Another possibility in the decrease of home prices in the luxury real estate market is the influx of supply.
"High-end buyers are usually not weighed down by rates, mortgages or competition from other buyers, but they do look for deals," said Redfin chief economist, Nela Richardson. "The luxury market was the first to recover from the housing downturn, and now it's a bellwether of slowing price growth for the rest of the market. Sales at the top end of the market continue to soar, but prices are downshifting."
"Luxury buyers don't buy because they need a place to live, so they have flexibility to time a home purchase when the market is favorable," added Redfin San Francisco agent, Mia Simon.
Redfin reported that Scottsdale, Arizona and Boca Raton, Florida have experienced the greatest drop in luxury home prices with 15 percent, while Fort Lauderdale isn't far behind, with a 14 percent drop in values.
"There's very limited land area to build single-family homes in Boca and Fort Lauderdale, so builders are focusing on luxury high-rises," said Aaron Drucker, Redfin managing broker in South Florida. "The increase in supply is pulling down sale prices for the entire luxury segment."
Washington, Denver, Delray Beach, Florida, and Bend, Ore on the other hand, has witnessed a double-digit, year-over-year price increase in the third quarter of 2015.
Oakland and Fremont also have increased luxury home prices, with nine percent and eight percent respectively.
