The luxury housing market in the U.S. bounced back in May as interest and prices increase sharply, the latest realtor.com report says.
Realtor.com defines luxury homes as those belonging to the top five percent most expensive houses in a given market. The entry point luxury house price rose to a median of $2.97 million, up by 6.1 percent from one year ago, accelerating faster than the mid-market, which grew 1.6 percent.
Realtor.com director of economic research Javier Vivas commented that the pandemic and recession had not made an equal impact on everyone, which is typical as high net worth buyers are traditionally less affected by the recession. For some, they see it as an investment opportunity or a time to offload cash.
Moreover, views of listings for high-end homes also grew by 7.3 percent year-over-year, a stark contrast to the decline it suffered in April when views for luxury homes dipped 9.5 percent compared to the same period last year.
Data suggests, however, that luxury homebuyers favored locations that are farther away from larger urban centers including Hamptons which saw views per property for million-dollar homes shoot up 72 percent in May compared to the same period last year; in comparison, views for this location at the start of the year were growing by 16 percent.
Other locations where buyers were looking for up-scale homes are New Jersey, with Union, Bergen, and Somerset counties. These locales saw view per property growing 28 to 40 percent compared to 10 to 21 percent pre-COVID.
Despite the demand shifting outward, three New York City boroughs, Queens, Manhattan, and Brooklyn, remain unchanged compared to May of last year; such condition is an improvement considering that luxury home prices slightly declined when the pandemic started impacting the housing market.
Second-home markets also a boost in demand after the peak impact of COVID-19. Realtor.com Chief Economist, Danielle Hale said that stay-at-home orders and the social distancing measures had helped push demand for a second home that is near the primary residence.
The top five markets that saw a rise in demand based on property views include second-home markets such as Suffolk, NY up 72% (Hamptons), Riverside, CA up 34% (Palm Springs), and Fairfield, CT up 47% (Greenwich).
However, not all second-home markets recorded a rise in demand. Honolulu, Monroe, FL (Key West), and Monterey, CA (Pebble Beach) saw declining change in property views, the report said.
Inventory of million-dollar listings dropped by 15.6 percent year-over-year, a slight improvement from record declines in April. Also, million-dollar homes listing went down by 15.1 percent compared to May of last year, improving from its 57.8 percent decline in April.
Price growth slowed down with just 25 out the 94 tracked counties recording price increase improvement in May as compared to the start of 2020. In 2019, 60 counties recorded price growth improvement during the same period.
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