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Unlike past housing booms, the real estate market is seeing a surge in sales at the very top of the housing market. More expensive properties are selling nearly twice as fast as lower- and mid-priced homes.
“Wealthier Americans have benefited greatly during the pandemic thanks to the rising stock market, which typically helps grow net wealth,” Lawrence Yun, chief economist at the National Association of REALTORS®, told The Washington Post. “So there’s greater demand for luxury housing now and that sector isn’t as hamstrung by inventory shortages as the rest of the market.”
Record-setting real estate transactions are occurring across the country. The number of home sales in the U.S. priced above $1 million surged 244.4% year over year in May, according to NAR.
The number of sales is outpacing sales in the $250,000 to $500,000 price range. Homes in that segment saw a 47.9% increase in May compared to a year earlier, NAR’s data shows.
“What we’re seeing now at the top of this market is a 100 percent escalation,” Aldo Martinez, a real estate broker in Las Vegas and president of Las Vegas REALTORS®, told The Washington Post.
Initially, the pandemic’s buying frenzy was mostly centered in suburban areas. But that has since spread across the market, including to the priciest homes for sale. Like other price points, the luxury market is also reportedly seeing more bidding wars than it traditionally does.
In Maryland’s Chevy Chase Village in Montgomery County, the owners of a five-bedroom home for sale accepted $4.54 million for their home. That was $1 million above the home’s asking price after only a week on the market, The Washington Post reports.
“We’re actually beginning to see the kind of inventory shortage at the luxury end of this market that we would typically see at the middle and lower ends,” Christie-Anne Weiss of TTR Sotheby’s International Realty in Washington, D.C., told The Washington Post.
Americans have been craving more space since the pandemic began. They’re snatching up larger homes while many people continue to work from home. Low mortgage rates and stock market gains also may have put more of these $1 million homes within reach.