New analysis reveals that the luxury housing market took a $1 billion overall price cut in the second quarter. Homes listed at $10 million or more had double the share of price drops this year than in 2016, per Redfin.
Senior economist for Redfin Taylor Marr explains, "Prices were growing too fast for what buyers were willing to pay." One of the contributing factors, CNBC reports, are sellers' irrational expectations, and growing supply. As well, the new tax law limiting state and local tax deductions is pressuring high-tax markets, home to many luxury listings, and many foreign buyers are not as attracted as they once were to American real estate as an investment.
Sellers were using the sky-high prices to attract attention to their properties. The luxury real-estate market has fallen since its peak in 2014 and 2015, and many sellers are finally adjusting to a different market. Supply of homes at the high end is also high, especially for newer condos and spec homes in New York, Los Angeles and major metro areas. "There could be an over-supply of these high-end homes," Marr said.
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