Rich buyers are buying more and more costly properties with cash, which is driving up prices for the priciest residences in the country. (Photo : by Frames For Your Heart / Unsplash)
Rich buyers purchasing costly properties with cash are driving up prices for the priciest residences in the country.
The median sale price of luxury homes, valued in the top 5% of the market, reached an all-time high of $1.23 million in the first quarter, up 8.7% over the previous year.
Despite an increase in the number of high-end houses available, the cost of the most expensive residences continues to rise, with 46.8% of luxury properties purchased exclusively with cash in the three months ending on February 29.
Rich buyers are buying more and more costly properties with cash, which is driving up prices for the priciest residences in the country.
According to a Redfin survey, the median sale price of luxury homes which are valued in the top 5% of the market nationwide reached an all-time high of $1.23 million in the first quarter, up 8.7% over the same period the previous year. That is nearly twice as much growth as non-luxury residences.
Rich homebuyers are more likely to have the financial freedom to pay cash instead of going through financing obstacles, which is one explanation for the disparate sales statistics.
In the three months that concluded on February 29, 46.8% of luxury properties were purchased exclusively with cash, according to Redfin. That is an increase from 44.1% in a decade.
Shifting Market Dynamics Impact Home Inventory and Affordability
On the other hand, compared to a year ago, the inventory of properties in the middle-third of the market decreased by 2.9% in the January-March period. The lack of availability has contributed to the rising cost of homes for the typical American.
Due to the fact that purchasing another home would require paying higher mortgage rates than they already do, homeowners have been reluctant to sell. Some homeowners are even more hesitant to give up on their wealth growth since they have witnessed the value of their home equity increase.
The research states that while sales of houses in the middle third of the market decreased 4.2% in the first quarter compared to a year earlier, sales of luxury residences increased 2.1%.
Redfin reports that purchasing a home is more expensive now than it has been for at least the past ten years, with rising mortgage rates and home prices acting as a double whammy for prospective homeowners.
