Luxury home values are rising faster than typical homes for the first time in years

Rhea-AI Summary

Zillow's latest analysis reveals that luxury home values are outpacing typical home appreciation for the first time in years. The typical luxury home in the U.S. is now worth about $1,620,000, with values up 3.9% year-over-year, compared to 3.2% for typical homes. This trend reversal is attributed to luxury buyers being less affected by higher mortgage rates and often able to pay in cash.

Key findings include:

• Luxury home inventory is 46.9% below pre-pandemic levels, a larger deficit than the overall market
• Richmond has the hottest luxury market, with values up 16.5% year-over-year
• Austin is the only major market where luxury home values have declined
• 20.8% of luxury listings experienced a price cut in June, compared to 24.5% of all listings

Positive

• Luxury home values increased by 3.9% year-over-year, outpacing typical home appreciation of 3.2%
• Richmond's luxury home market is booming with a 16.5% year-over-year increase in values
• Luxury home inventory is up 15.7% year-over-year, indicating increased market activity
• Only 20.8% of luxury listings had price cuts, lower than the 24.5% for all listings, suggesting stronger demand

Negative

• Luxury home inventory remains 46.9% below pre-pandemic levels, indicating a supply shortage
• Austin's luxury home values declined by 1.5% year-over-year, the only major market to see a decrease
• The share of luxury listings with price cuts increased from 19.4% to 20.8% year-over-year, indicating some pricing pressure

Listings for luxury homes are seeing relatively more competition than homes in the market's midrange

• Luxury home values are up 3.9% year over year. 
• Inventory of luxury homes remains 46.9% below pre-pandemic levels, a bigger deficit than in the housing market overall. 
• Richmond has the hottest luxury housing market in the country. Austin is the only major market where luxury home values have declined throughout the past year. 

SEATTLE, July 31, 2024 /PRNewswire/ -- Luxury home value growth, which has consistently lagged the market's middle tier over the past several years, has now outpaced appreciation on typical homes for five consecutive months, a new Zillow® analysis shows. 

The typical luxury home nationwide — defined for this analysis as the most valuable 5% of homes in a given region — is worth about $1,620,000. Among the 50 largest U.S. metro areas, the typical luxury home ranges from a low of just under $750,000 in Buffalo to more than $5.3 million in San Jose. 

Luxury home values across the U.S. are 3.9% higher than a year ago. That's faster appreciation than the 3.2% annual growth for the typical U.S. home. For every month from January 2019 — the earliest year-over-year change in Zillow's records — through January 2024, typical home values were outpacing luxury homes on an annual basis. For every month since, luxury home values have been growing faster. 

"Luxury homes can be challenging to sell because the pool of buyers is so much smaller. That's one reason prices for them usually grow more slowly," 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." 

Luxury home inventory has been slower to recover than inventory overall, helping to keep prices climbing. Inventory in the luxury segment is up 15.7% year over year and is 46.9% below pre-pandemic norms. By comparison, total inventory is 22.7% higher than last year and about 32.6% below pre-pandemic averages.

The share of luxury listings with a price cut is climbing, but is tracking below the market as a whole. In June, 20.8% of luxury listings experienced a price cut, up from 19.4% the previous June. Among all homes, 24.5% of listings had a price cut. 

The luxury home market in Richmond is red hot, with values 16.5% higher than last year, far surpassing the growth seen in any other major market. Hartford luxury homes had the next strongest growth, up 8.6% over the same period. Luxury home inventory in Richmond is down 13.2% year over year, making it one of only six major markets with fewer luxury homes for sale than last year. Luxury homes in Richmond that sold in June did so after just six days on the market, the fastest rate in the country. 

Austin is the only major market where luxury home values declined over the past year, down 1.5%. Home values in Austin overall saw a meteoric rise during the pandemic, and a building boom in response to that demand has helped lessen competition for each home and bring price growth under control.

Metro Area	Typical Luxury Home Value	Luxury Home Value Change Year over Year (YoY)	Luxury For-Sale Inventory Change (YoY)	Share of Luxury Listings with a Price Cut	Median Days to Pending for Luxury Listings
United States	$1,619,685	3.9 %	15.7 %	1.4 %	24
New York, NY	$3,483,722	2.2 %	-4.4 %	0.5 %	57
Los Angeles, CA	$4,642,958	3.5 %	35.5 %	2.1 %	31
Chicago, IL	$1,343,781	5.6 %	0.5 %	-0.4 %	13
Dallas, TX	$1,635,382	5.3 %	32.6 %	5.4 %	22
Houston, TX	$1,415,411	4.8 %	0.0 %	2.1 %	23
Washington, DC	$2,029,263	3.4 %	11.3 %	-3.5 %	11
Philadelphia, PA	$1,269,418	4.6 %	14.4 %	2.2 %	8
Miami, FL	$4,077,925	2.9 %	15.0 %	1.4 %	83
Atlanta, GA	$1,457,787	5.0 %	16.8 %	1.4 %	23
Boston, MA	$2,698,471	5.8 %	13.7 %	-0.7 %	17
Phoenix, AZ	$2,037,033	7.1 %	19.1 %	6.2 %	39
San Francisco, CA	$4,298,273	1.1 %	-4.0 %	-1.0 %	16
Riverside, CA	$1,692,781	4.6 %	21.8 %	-0.5 %	35
Detroit, MI	$903,679	3.7 %	11.0 %	0.6 %	7
Seattle, WA	$2,927,108	4.5 %	3.2 %	0.3 %	9
Minneapolis, MN	$1,188,521	0.9 %	15.9 %	2.3 %	26
San Diego, CA	$3,799,265	5.9 %	17.3 %	-2.7 %	24
Tampa, FL	$1,639,706	2.7 %	80.4 %	0.0 %	38
Denver, CO	$1,991,133	1.1 %	11.6 %	2.9 %	17
Baltimore, MD	$1,329,549	4.6 %	13.3 %	0.5 %	8
St. Louis, MO	$1,002,017	4.8 %	8.5 %	1.5 %	7
Orlando, FL	$1,425,759	4.7 %	43.2 %	1.0 %	30
Charlotte, NC	$1,607,506	7.9 %	21.2 %	5.6 %	22
San Antonio, TX	$1,158,841	1.0 %	19.6 %	0.0 %	33
Portland, OR	$1,506,635	0.4 %	19.3 %	-2.1 %	20
Sacramento, CA	$1,794,005	2.1 %	17.0 %	-0.5 %	18
Pittsburgh, PA	$839,418	5.2 %	1.4 %	3.8 %	11
Cincinnati, OH	$949,801	5.3 %	6.5 %	-0.8 %	7
Austin, TX	$2,106,787	-1.5 %	24.7 %	1.9 %	68
Las Vegas, NV	$1,587,199	7.5 %	0.2 %	1.7 %	42
Kansas City, MO	$1,041,851	4.4 %	15.9 %	3.5 %	8
Columbus, OH	$1,014,617	4.4 %	26.8 %	1.1 %	10
Indianapolis, IN	$988,246	3.2 %	12.8 %	-2.9 %	9
Cleveland, OH	$810,190	7.1 %	-4.5 %	2.3 %	8
San Jose, CA	$5,330,815	6.4 %	19.1 %	-4.7 %	10
Nashville, TN	$2,113,255	3.1 %	12.1 %	2.1 %	35
Virginia Beach, VA	$1,227,058	5.6 %	10.1 %	-2.3 %	32
Providence, RI	$1,861,985	7.8 %	30.5 %	2.6 %	20
Jacksonville, FL	$1,646,706	4.3 %	36.5 %	5.9 %	44
Milwaukee, WI	$1,234,835	5.5 %	-19.5 %	-3.5 %	24
Oklahoma City, OK	$847,637	1.7 %	24.4 %	4.5 %	34
Raleigh, NC	$1,489,123	6.9 %	38.0 %	-1.1 %	9
Memphis, TN	$860,564	2.2 %	41.5 %	0.6 %	40
Richmond, VA	$1,152,228	16.5 %	-13.2 %	1.8 %	6
Louisville, KY	$848,250	2.6 %	43.5 %	-1.0 %	9
New Orleans, LA	$1,033,156	0.0 %	17.3 %	1.1 %	42
Salt Lake City, UT	$1,600,130	4.0 %	34.2 %	0.1 %	20
Hartford, CT	$1,004,138	8.6 %	3.0 %	2.5 %	7
Buffalo, NY	$748,623	4.9 %	-5.4 %	0.7 %	11
Birmingham, AL	$1,124,634	4.0 %	19.3 %	1.2 %	13
*Table ordered by market size

About Zillow Group

Zillow Group, Inc. (Nasdaq: Z and ZG) is reimagining real estate to make home a reality for more and more people. As the most visited real estate website in the United States, Zillow and its affiliates help people find and get the home they want by connecting them with digital solutions, dedicated partners and agents, and easier buying, selling, financing and renting experiences. 

Zillow Group's affiliates, subsidiaries and brands include Zillow^®, Zillow Premier Agent^®, Zillow Home Loans℠, Trulia^®, Out East^®, StreetEasy^®, HotPads^®, ShowingTime+℠, Spruce^® and Follow Up Boss^®. 

All marks herein are owned by MFTB Holdco, Inc., a Zillow affiliate. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org). © 2024 MFTB Holdco, Inc., a Zillow affiliate.

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SOURCE Zillow

FAQ

What is the current value of a typical luxury home in the US according to Zillow's analysis?

According to Zillow's analysis, the typical luxury home in the United States is currently worth about $1,620,000.

How much have luxury home values increased year-over-year for Zillow stock (ZG)?

Zillow's analysis shows that luxury home values have increased by 3.9% year-over-year.

Which city has the hottest luxury housing market according to Zillow's report?

According to Zillow's report, Richmond has the hottest luxury housing market in the country, with values up 16.5% year-over-year.

What is the current state of luxury home inventory compared to pre-pandemic levels for Zillow (ZG)?

Zillow's analysis indicates that the inventory of luxury homes remains 46.9% below pre-pandemic levels.

Which major market is the only one where luxury home values have declined in the past year, according to Zillow (ZG)?

According to Zillow's report, Austin is the only major market where luxury home values have declined over the past year, down 1.5%.