California Leads U.S. Growth of +$1M Luxury Home Sales

Redfin, the large national real estate firm based in Seattle, is reporting that, while sales of homes costing over $1 million is still outpacing the rest of the market, the source of these sales is changing.  The company says that the luxury housing market, which was the first segment to recover after the housing crisis, continues strong, driven by a record high stock market, low interest rates and by foreign investors.

Sales of home costing more than $1 million increased by 9 percent in the third quarter of 2014 even as all home sales were down 1.2 percent when compared to the third quarter of 2013.  However Redfin says that overseas investment in these homes is beginning to flag and those markets which have benefitted the most from foreign investors are seeing "a steady and dramatic decline in sales of million-dollar-plus homes."  Those cities where there is less reliance on investors, both foreign and domestic, are still seeing a steady increase in high-end sales. 

Looking forward the company says that luxury home sales will continue strong for the rest of this year and the next but, at just under 3 percent of the market, those sales will have a limited impact on overall market growth.  "This sector of the market, particularly in the places that have typically had strong foreign interest, will need traditional (and well-heeled) buyers to offset disappearing demand from international investors."