Luxury housing markets across the U.S. have seen declines in 2016, but according to a new analysis from Redfin, few markets have slowed more than Boston.
Through Q1 2016, the average sale price for luxury homes in Boston was $3.19 million, an 11.8 percent decline from Q1 2015. That was the fourth-largest such decline in the country, and meanwhile, the average sales price for the rest of the Boston market rose 6.3 percent to $608,000.
What Ails Luxury Housing
What could be behind the declines in luxury housing? According to Redfin’s report, there are two major causes – the fluctuations in the stock market and the strong U.S. dollar.
On the stock market side, falling shares negatively impact high-net-worth consumers’ portfolios, making them less likely to purchase pricey real estate. And though a strong U.S. dollar has some benefits – for instance, goods from other countries are cheaper – it also makes American real estate more expensive to foreign consumers, who have a large presence in luxury markets across the country.
Redfin Chief Economist Nela Richardson explained: “Luxury buyers are out of step with the rest of the market because their wealth is at stake. Instead of cheering rock-bottom mortgage rates, luxury buyers recoiled from high-end spending in the face of volatile asset prices.”
Here is a chart showing how luxury markets have stalled across the country:
| City | Avg Sale Price –Luxury | YOY Change | Avg Sale Price – Rest of Market | YOY Change |
|---|---|---|---|---|
| Sandy Springs | $1,546,000 | -14.9% | $361,000 | 3.1% |
| Miami Beach | $5,738,000 | -13.7% | $599,000 | -1.6% |
| Austin | $1,504,000 | -11.8% | $352,000 | 5.1% |
| Boston | $3,190,000 | -11.8% | $608,000 | 6.3% |
| Alexandria | $1,408,000 | -6.9% | $440,000 | -0.2% |
| San Diego | $2,477,000 | -5.9% | $529,000 | 0.8% |
| Houston | $1,377,000 | -5.1% | $232,000 | 0.9% |
| San Francisco | $4,407,000 | -4.7% | $1,217,000 | 4.5% |
| Pompano Beach, FL | $1,123,000 | -4.2% | $197,000 | 4.2% |
| Washington, D.C. | $2,042,000 | -4.2% | $537,000 | 1.1% |
| Spring, TX | $1,077,000 | -4.1% | $226,000 | -7.8% |
| Los Angeles | $4,186,000 | -1.3% | $690,000 | 10.4% |
| Bend, OR | $1,067,000 | -0.7% | $379,000 | 6.5% |
| San Jose | $1,960,000 | -0.6% | $788,000 | 5.3% |
This is also happening in the suburbs west of Boston. Luxury home buyers have lots of choices in Weston, Wayland, Sudbury, and Concord area. Some of the properties have been on the market for several months and some for a year or more. Great time to make a deal! http://www.marilynmessenger.com