Prices of homes in the real estate market are increasing but the same cannot be said for luxury homes. According to a recent report, prices of luxury homes across the U.S. continue to drop. Does this mean there are less luxury homebuyers than before?
According to Realtor.com, there has been a 50 percent increase in the number of luxury homes for sale that went through a price cut in January 2016 as compared to last year's figures. 4.1 percent of luxury homes, which were priced at $5 million and above, got a price cut with a median reduction of $501,000 or 7.2 percent of the listing price.
While this may indicate that there are fewer buyers of luxury homes in the U.S., the publication notes that this may only be a temporary issue.
"It's not that the high-end of the market has evaporated. It's just that there's a bit of a correction at that end of the market," said listing agent Jason Haber.
This may also mean that luxury home sellers are now becoming more realistic with property values after seeing that offers were no longer as plenty as before. The publication noted that years ago, prices of luxury homes were too high and stated that 2014 was considered a "banner year" for luxury homes, but in 2015, sales seemed to have dropped from its peak.
While this drop in the prices of luxury homes for sale in the market is affecting several parts in the U.S., SFGate reports that San Francisco appears to be unaffected by this issue. According to the publication in 2015, San Francisco homes priced between $1 and $5 million were sold 7 percent higher than its asking price.
San Francisco also had the third highest number of sales in homes priced between $1 and $5 million with 2,432 sales, next to Los Angeles at 2,776 and New York City at 7,445.