The demand for luxury homes slowed nationally in 2017, a new report from realtor.com shows. While sales in the upper tier remain strong, activity in the overall housing market exceeded the pace of luxury home sales across the country.
2017 saw a rise in the entry-level luxury price segment, determined by the top 5 percent of transactions based on sales price. Compared to the 6.9 percent overall housing market price gain, the entry-level luxury price grew by 5.1 percent. In addition, the length of time luxury properties took to sell increased by 5.4 percent to 116 days compared to 2016.
Accounting for the weakened demand is the market’s growing number of luxury homes. The number of million-dollar listings increased 3.9 percent year over year and comprised of more than 7 percent of all properties listed in 2017.
“Although 2017 was another strong year for the luxury housing market, it was once again outperformed by the U.S. market overall,” said Javier Vivas, director of economic research for realtor.com. “Age of inventory in the top 5 percent of the market slowed significantly over last year — a telltale sign that the supply in the luxury sector continues to outpace demand. Much of this slowing can be attributed to a wider selection of luxury homes for buyers and increased uncertainty over the last 12 months.”
Despite indication of a national slowdown, demand in the luxury market remained strong in Hawaii, Colorado and California. Several local markets in these states faced double-digit price gains. A dozen counties, including four in Hawaii, saw entry-level home prices grow by over 10 percent in 2017.