SEATTLE, WA — Luxury home values have surged ahead of the market’s middle tier, marking five straight months of faster appreciation than typical homes, according to a new Zillow® analysis.
Luxury homes, which comprise the most valuable 5% in a given region, are up 3.9% year over year. This growth surpasses the 3.2% annual increase seen in the broader market. The typical luxury home in the U.S. is now worth about $1,620,000. Among the 50 largest metro areas, luxury home values range from just under $750,000 in Buffalo to over $5.3 million in San Jose.
“Luxury homes can be challenging to sell because the pool of buyers is so much smaller,” said Anushna Prakash, economic research scientist at Zillow. “We’re seeing a different trend play out this year. Luxury home buyers are likely less affected by higher mortgage rates than a typical buyer, especially repeat buyers who saw their home equity soar over recent years. Many will be able to pay with cash and skip a mortgage payment altogether.”
Inventory of luxury homes remains tight, 46.9% below pre-pandemic levels, despite a year-over-year increase of 15.7%. By comparison, total inventory is 22.7% higher than last year but still 32.6% below pre-pandemic norms.
Richmond leads the luxury housing market with values up 16.5% year over year. Hartford follows with an 8.6% increase. Richmond also boasts a rapid market, with luxury homes selling in just six days on average in June.
Conversely, Austin stands out as the only major market where luxury home values declined, dropping 1.5% over the past year. This decline follows a significant rise during the pandemic and a subsequent building boom that has eased competition.
Luxury home inventory’s slower recovery compared to the overall market continues to pressure prices upward. In June, 20.8% of luxury listings had a price cut, slightly below the 24.5% seen in the broader market.
These trends highlight the unique dynamics at play in the luxury segment, where buyer profiles and market conditions differ significantly from the general housing market.
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