Luxury homes are just that—a luxury. And in a time when almost 15 percent of Americans are out of work, necessities come first while the purchases of nonessentials are chopped or kicked down to the road. The priciest fifth of homes on the market has experienced the steepest drop in new listings compared to more affordable houses, according to Zillow. Though the trend toward affordable housing started before the pandemic, the coronavirus’ economic impact has accelerated that push and further hurt the luxury real estate market.
The overall number of newly listed homes for sale on Zillow was down 39% year-over-year as of May 3, a slightly larger decline than the week before and a reminder that the usual surge of Spring listings is not happening this year in the wake of the nationwide coronavirus outbreak.
But while the pullback in listing activity has been deep and widespread, some sellers are still making the choice to list their homes — people choose to buy and sell homes based on major life events, which are still very much happening, and not just market activity. And sellers of the nation’s most-affordable homes appear to be more willing to test the waters than owners of more-expensive homes.
Nationwide, new listings among the priciest fifth of homes were down by 46% compared to a year ago, according to a Zillow analysis of listing counts by home value quintile, up a little from the 51% year-over-year decline recorded in mid-April, but still by far the most depressed segment. New listings of these most-expensive homes were the first to fall in response to the pandemic, and receded most quickly from the market when the U.S. outbreak began in earnest in March. These listings began to fall below 2019 levels on March 18, while much cheaper listings did not fall into negative year-over-year territory until more than a week later. On a typical early-May day in past years, about 28% of new for-sale listings were priced within the top fifth of the home value distribution in a given metro. As of the week ending May 3, these homes made up 25% of new homes coming onto the market.