Luxury Home Sales Are Plummeting in These Pricey Metros
Luxury home sales fell 45% during the three months ending Jan. 31, 2023, compared with the same period one year ago, led by substantial drops in Miami and Long Island, N.Y. At the start of the COVID-19 pandemic, Miami welcomed an influx of wealthy buyers migrating from the Northeast, but at the start of 2023, luxury sales in Florida’s popular oceanfront metro dropped by nearly 69%. That decline was followed by the Hamptons, where luxury sales declined nearly 63% at the end of January, CNBC reports.
A drop in new listings, paired with volatility in financial markets, is leading to a slowdown in the luxury real estate market, especially in overpriced metros where housing costs are still rising.
While not all luxury buyers use mortgages, they are affected by the broader economy, and more specifically the stock market. Volatility in financial markets is therefore having an outsized effect on the luxury real estate market.
Competition is easing not just because of falling demand. Supply is rising. Inventory rose 7% year over year, which was the largest increase since 2015.
Yet supply is also still historically tight – not that much higher than the record lows of 2022. New listings are also down 22%, indicating that supply is higher because homes are sitting longer.