Dive Brief:
- The U.S. luxury home market, which has seen a year-over-year 0.5% drop in inventory of $1 million-plus home inventory and a sales increase of 10.7%, is still displaying volatility from metro to metro, according to Redfin.
- Luxury markets like Longmont, CO, and Alpharetta, GA — where buyers are also fulltime residents, performed well in the second quarter — and traditionally pricey metros like Miami Beach and San Diego recovered from their Q1 drops.
- Demonstrating the lack of cohesiveness in the U.S. luxury market, however, is San Francisco, which is still losing ground after a four-year price race to the top, and properties in the Washington, DC, metro area are also in a slump in the run up to the presidential election in November.
Dive Insight:
Brexit might also have an impact on the U.S. luxury market, according to Redfin, as foreign buyers look to a more stable housing environment. However, Redfin Chief Economist Nela Richardson said that the Brexit-caused volatility in the stock market could have made buyers in metros like San Francisco "queasy." Even foreign investors looking for a safe haven could be put off by the up-and-down markets in those areas where the stock market has such a big impact.
Another headache for the luxury market could come in the form of Treasury Department investigations into money laundering and real estate. The U.S. government now requires that individuals behind all-cash LLC luxury purchases to disclose their identities, which could chill investment in big-ticket homes, according to Redfin.
In June, a Paragon Real Estate Group analysis revealed that luxury sales in the San Francisco area had declined in the wake of a slowdown in the area's IPO market. However, instead of characterizing the shift as a downturn, Paragon referred to the lack of luxury sales as a "cooling of a desperately overheated market to something closer to normal."
