According to recent sales data collected by Redfin, luxury home sales in the United States went up significantly in the first quarter of 2021. Compared to Q1 2020, they went up an astounding 41.6% in the high-end market between January and March of this year!
By the Numbers
Some may simply attribute this to the market recovery coming out of the pandemic. However, these luxury home sales numbers are even more impressive when compared to other residential real estate sales for the first quarter. Redfin broke the sales down into 5 primary categories based on average selling price:
- Luxury: 41.6%
- Expensive: 15.3%
- Mid-Priced: 5.9%
- Affordable: 7.0%
- Most Affordable: 14.7%
As you can see by these numbers, sales in the most expensive market were significantly higher than in any other market. In fact, the most “average” real estate sales in the median would fall in the “mid-priced” and “affordable” categories. Those sales were up in Q1 and that’s good for our economic recovery. Yet, the sales data pales in comparison with the luxury homes or even the “expensive” homes priced in the second tier category.
Historic Real Estate Trends
Historically speaking, sales growth is usually pretty similar across all price tiers, with the luxury market most likely to move the slowest because those sales typically take a little longer than average. Other than the when the real estate market in the U.S. was basically shut down during March and April last year, it has been one of the hottest industries during the pandemic. There has been high buyer demand and historically low mortgage rates.
Low Inventory and Remote Working
The biggest challenge has been low housing inventory. However, that has helped drive selling prices up and decreased the average number of days on market. For example, the average luxury home was on the market for 61 days in Q1 2021 compared to 99 in Q1 2020. Redfin attributes this spike in luxury market activity to several key factors. First, the housing shortage is less severe in the luxury market, so there are more homes to sell. Wealthier Americans are also enjoying steady paychecks, low mortgage rates and increased opportunities to work from home.
The remote working trend is a significant factor because it has freed up many people to move. This has increased the number of luxury homes on the market (15.8% more year over year) in urban and suburban areas. Meanwhile, these are still very desirable properties in great locations, so there is plenty of buyer demand for these high-end homes. Redfin notes that cities like Miami, San Jose, Oakland, Sacramento and Las Vegas are among the country’s top migration destinations.
Jumbo Loans and Mortgage Pre-Approval
At Transparent Mortgage, we have definitely seen an increase in jumbo loan applications and buyers looking to move up into higher-end homes. Mortgage applications are up across the board as the real estate market remains hot and activity is moving at a rapid pace.
If you are buying a home in today’s real estate market, it’s important to be prepared. Get pre-approved for your mortgage loan to understand what you can truly afford and to make your offers much more attractive to sellers. Contact Transparent Mortgage today to get started on your home loan application.