The cost of luxury in the United States may be waning a little bit, at least as far as home prices are concerned. While the majority of homebuyers in the country have been dealing with ever-increasing home prices and inventories tighter than your belt after an all you can eat buffet, those looking to buy a luxury home, defined as the most expensive 5 percent of homes sold in a given quarter, have seen prices heading in the opposite direction and have had more options that they knew what to do with.
Compared to first quarter 2015, luxury home prices in the United States fell 1.1 percent in the first quarter of 2016, Redfin reports. During this same time period, the other 95 percent of homes saw a year-over-year price appreciation of 4.7 percent. In addition, while the average home in the bottom 95 percent was on the market for 74 days, homes in the top five percent were on the market for an average of 87 days.
Part of what may be affecting the prices of luxury homes is the recent volatility of the stock market. After dropping steeply in January and February, stock prices rebounded, but fluctuations like this often times affect high-end buyers more because they tend to pull from investment portfolios to finance luxury home purchases. Meanwhile, the U.S. dollar remains strong compared to many other currencies, which has given many foreign buyers second thoughts about purchasing real estate in the U.S.
Sandy Springs, Ga., and Miami Beach, Fla., experienced the largest declines in the year-over-year numbers for their luxury housing markets. Sandy Springs experienced a 14.9 percent drop in values for homes in the top five percent of the market and Miami Beach saw prices drop 13.7 percent in its own luxury market.