U.S. Luxury Home Prices Spike 9%, But Inventory Grows

 Redfin reports that thanks to all-cash buyers, luxury home prices grew nationally more than non-luxury homes in the second quarter of 2024.

SEATTLE — The typical U.S. luxury home sold for a record $1,180,000 in the second quarter, up 8.8% from a year earlier – the biggest increase in nearly two years. Non-luxury home prices grew at less than half that pace, rising 3.8% to a record high median of $342,500, according to a new report from the real estate brokerage Redfin.

Redfin defines luxury homes as those estimated to be in the top 5% of their respective metro area based on market value, and non-luxury homes as those estimated to be in the 35th-65th percentile based on market value.

“The luxury market has withstood the havoc wreaked by high mortgage rates this year, thanks to an abundance of all-cash buyers,” said Redfin Senior Economist Sheharyar Bokhari. “Now that sales are stabilizing and more homes are being listed for sale, it’s unlikely that luxury prices will continue to grow at quite as high a rate.”

High-end buyers were less likely to be impacted by the rate lock-in effect and uncertainty around the direction of mortgage rates, which sat above 7% for much of the quarter. They were also more likely to have benefited from a strong stock market and high levels of home equity. This spring, 43.7% of luxury homes sold were purchased with all cash, up from 43.2% a year earlier. (Note the all-cash data covers the three months ending in May, the most recent month for which all-cash data is available).

Luxury home sales stay positive as non-luxury sales fall

The number of luxury homes sold in the second quarter was virtually unchanged from a year earlier, ticking up by 0.2%, marking the third consecutive quarter of sales growth. Non-luxury home sales fell 3.4% to the lowest second-quarter number in a decade.

“There is still strong demand for well-priced, high-end properties, especially those which are presented beautifully and move-in ready,” said Crystal Zschirnt, a Redfin Premier agent in Fort Worth, TX, where luxury home sales were up 9.7% year on year and typically sold four days faster than non-luxury homes. “We had a client recently list a property for $2.4 million that we ended up selling for $2.6 million. We are still seeing multiple offers in situations where a property is priced accurately, visually appealing and doesn’t need any work.”

Even though the overall market is seeing far less activity than it did pre-pandemic—in large part due to an ongoing supply shortage—the luxury market has made up more ground since. Compared to the second quarter of 2019, luxury sales were down 12.8%, while non-luxury sales were down 20.1%.

Luxury home inventory grows to highest level in 3 years

Luxury inventory rose 9.7% year over year, the fourth consecutive quarter of growth following a major drop off during and after the pandemic. Non-luxury inventory rose 3.9%. It’s worth noting inventory in both categories is still well below pre-pandemic levels.

The number of new listings of luxury homes increased 11%, far outpacing the 2.6% increase in new listings of non-luxury homes.

Luxury and non-luxury homes sitting longer on market

With inventory increasing, luxury homes stayed on the market a median 40 days—two days longer than a year earlier. Non-luxury homes also took longer to sell—a median 31 days—up from 28 days last year.

“We are seeing luxury homes selling within 30-45 days, but that’s a lot longer than in 2022 when they were flying off the shelf,” said Juan Castro, a Redfin Premier agent in Orlando, FL, where inventory ballooned 22.7% in the second quarter, year over year. “International cash buyers are still driving activity, but we have seen a slowdown in local buyers, as it’s really hard to upsize to a luxury home with a 7% mortgage rate.”

Metro-level luxury highlights: Q2 2024

Redfin’s metro-level luxury data includes the 50 most populous U.S. metros. Some metros are removed from time to time, to ensure data accuracy. All changes noted below are year-over-year changes.

• Prices: The median sale price of luxury homes rose most in Providence, RI (16.5% increase to $1,395,000), San Jose, CA (16.4% increase to $4,830,000) and Nassau County, NY (14.3% increase to $2,572,500). It fell in just two metros, in New York (-3.2% to $3,200,000) and Austin, TX (-1.5% to $1,650,000).
• Sales: Luxury home sales increased most in Nashville, TN, (20.4%), Tampa, FL (14.3%) and Seattle (13.9%). They decreased most in Newark, NJ (-20.1%), Baltimore, MD (-15.5%) and Indianapolis, IN (-12.4%).
• Active listings: The total number of luxury homes for sale increased most in Tampa, FL (29.6%), Jacksonville, FL (28.9%) and San Antonio, TX (26.6%). Total inventory fell the most in Newark, NJ (-16%), Chicago (-9.8%) and Atlanta (-6.2%).
• New listings: New listings of luxury homes increased most in Providence, RI (31.5%), Miami (28.1%)and Tampa, FL (27.6%). New listings fell in 11 metros, with the biggest declines in Newark, NJ (-18.3%), San Francisco (-15.4%) and Chicago (-8.9%).
• Speed of sales: Luxury homes sold fastest in Seattle with a median of six days, while Detroit, San Jose, CA and Indianapolis, IN all recorded a median of 10 days. They sold slowest in Miami (114 days), West Palm Beach, FL (108) and Nassau County, NY (81).

10 most expensive U.S. home sales: Q2 2024

• Glenwood Springs, CO (Aspen): $77M
• Glenwood Springs, CO (Aspen): $66.5M
• Los Angeles, CA: $62.8M
• Miami, FL (Miami Beach): $62.5M
• Glenwood Springs, CO (Aspen): $59M
• West Palm Beach, FL (Palm Beach): $51.3M
• West Palm Beach, FL (Highland Beach) $50M
• West Palm Beach, FL (Palm Beach): $49.6M
• Glenwood Springs, CO (Aspen): $48.8M
• Glenwood Springs, CO (Woody Creek): $46M

© 2024 Florida Realtors®

South and Central Florida had the highest rent price increases after the pandemic

Tampa and Miami saw the highest percentage increase in rents from June 2019 to June 2024.

SANTA CLARA, Calif. – Rents fell again in June, with especially large declines in the South, where there's been an influx of new rental units, according to a Realtor.com Rental Report. The median asking rent for 0-2 bedroom units fell -0.4% ($7) from last June to $1,743, marking the 11th straight month of declines and -0.6% ($11) below its August 2022 peak. Still, some markets have seen rents surge by as much as 40% compared to 2019's pre-pandemic levels, with Tampa, Fla., seeing the largest increase over the past five years.

The Top 10 markets experiencing the fastest price growth versus pre-pandemic rents include: Tampa-St. Petersburg-Clearwater, Fla. (+39.5%); Miami-Fort Lauderdale-Pompano Beach, Fla. (+39.2%); Indianapolis-Carmel-Anderson, Ind.(+37.5%); Pittsburgh (+37.4%); Sacramento-Roseville-Folsom, Calif. (+35.8%); Virginia Beach-Norfolk-Newport News, Va.-N.C. (+32.5%); New York-Newark-Jersey City, N.Y.-N.J.-Pa. (+31.3%); Cleveland-Elyria, Ohio (+30.6%); Raleigh-Cary, N.C. (29.8%); and Birmingham-Hoover, Ala. (+29.3%).

"Rents have been steadily falling for almost a year, though the pace of the decline has slowed," said Danielle Hale, chief economist at Realtor.com. "But rental costs have risen significantly since before the pandemic and inflation has further strained renters' budgets, underscoring the need for more supply to meet demand and to keep renters from contributing an increasing percentage of their incomes to housing costs."

Tampa saw the highest rent growth since before the pandemic

The median asking rent for 0-2 bedroom units across the top 50 metro areas in June was 21.2% ($305) higher than the same month in 2019, before the pandemic roiled the housing market. That's roughly in line with the trend in overall consumer prices (+22.6%) during the same period, but pales in comparison to the 52.6% increase in median price-per-square-foot of for-sale home listings in the five years ending June 2024.

Half of the 10 markets with the highest percentage increase in rents from June 2019 to June 2024 were in the South, led by Tampa, Fla. (39.5%) and Miami (39.2%). In Tampa, for example, the median asking rent in June was $1,752, or $496 higher than the pre-pandemic level. That is equivalent to about 8.6% of a typical Tampa household's monthly gross income. The biggest increase in the Midwest came in Indianapolis, up 37.5% to $1,353. Pittsburgh saw the largest percentage jump in the Northeast, with the median asking rent rising 37.4% to $1,484, and Sacramento, Calif. led the West, with the median rent climbing by 35.8% to $2,007.

Rents fell in the South, rose in the Midwest, and were mixed on the coasts

Regionally, rental trends were mixed in June. The biggest year-over-year declines were all in the South, led by Austin, Texas (-9.5%), San Antonio (-8.2%), and Nashville, Tenn. (-8.1%). Those areas have seen substantial increases in the supply of new rental units. In the Midwest, rents rose overall, with increases seen in Indianapolis (+4.4%), Milwaukee (+3.7%) and Minneapolis (+3.7%). Large metros in the West saw year-over-year rents decline, including Los Angeles (-1.9%) and San Francisco (-4.2%). Meantime, big coastal cities in the Northeast, such as New York (+0.6%) saw rental rates edge up, albeit more slowly than before.

Units of all sizes saw rents decline

Median asking rents fell across all size categories, with smaller units showing larger declines. The median rent for studios fell by -1.2% on a year-over-year basis, to $1,463. That's -2.0% lower than its October 2022 peak but 17.6% higher than five years ago. Median rent for one-bedroom units fell -1.1% to $1,618, for the 13th consecutive year-over-year decline. That's still 19.5% higher than it was five years ago. And the median rent for two-bedroom units fell by -0.3% to $1,939 for the 12th consecutive month of annual declines, though it was a smaller drop than seen in May. These larger units had the highest growth rate over the past five years, rising by 23%.

© 2024 Florida Realtors®

Fannie Mae: U.S. Home Price Growth to Moderate

 Many Sunbelt metros are currently seeing significant increases in for-sale inventories, in part due to new construction, a Fannie Mae economist said.

WASHINGTON – Home price growth in the second quarter was stronger than previously anticipated but will likely moderate soon, closing 2024 and 2025 at annual rates of 6.1% and 3.0%, respectively, according to the July 2024 commentary from the Fannie Mae Economic and Strategic Research (ESR) Group.

Despite a more than 30% increase in listings of homes available for sale compared to a year ago, certain indicators of housing activity remain soft, as evidenced in part by fewer existing home sales in May compared to a year ago. This dynamic of gradually increasing supply and affordability-constrained demand is expected to cause home prices, which were up 3% on a non-seasonally adjusted basis in the second quarter, according to the Fannie Mae Home Price Index, to moderate going forward.

Additionally, the ESR Group notes recent regional volatility in listings and home prices, as many large metros in the Sunbelt, for example, now have inventory levels that match or even exceed for-sale inventories in 2019. This contributed to the ESR Group revising downward its starts and new home sales forecasts; notably, however, it revised upward its existing home sales forecast due to a modestly lower mortgage rate path.

The ESR Group made only modest revisions to its economic growth outlook, as incoming data have come in largely in line with expectations for slowing growth. Notably, due to two consecutive lower-than-expected prints of the Consumer Price Index (CPI), the ESR Group downwardly revised its inflation forecasts and now expects the CPI to end the year at 2.9% and the Fed's preferred inflation gauge, the core Personal Consumption Expenditures (PCE) Index, to end the year at 2.5%. Due to the better inflation prints and signs of slowing in the labor market, the ESR Group now expects the Federal Reserve to cut rates in both September and December.

"The housing market continues to wait for affordability to improve, even as the supply of new and existing homes for sale slowly rises," said Doug Duncan, Fannie Mae senior vice president and chief economist. "The slight decline in mortgage rates of late, following data pointing to gradually slowing economic growth, has not been enough to overcome the significant affordability constraints imposed on would-be homebuyers. As such, despite more homes being listed for sale, actual home sales have not picked up.

We continue to expect home price growth on a national level to decelerate but remain positive – over the near term, but it should be noted that conditions often vary by region, particularly as it relates to supply. For instance, many Sunbelt metros are currently seeing significant increases in for-sale inventories, in part due to new construction, while supply in much of the Northeast and Midwest remains extremely tight. In aggregate, we expect these varied market conditions to lead to a slight decline in total new home sales nationally for the full-year 2024, but a slight increase in existing homes sales."

© 2024 Florida Realtors®

Florida’s Housing Inventory Up, Prices Moderating

 By Marla Martin

June inventory and new listings rose year-to-year for single-family homes and condo-townhouse units. Single-family prices up 1.7% ($427K), condo prices remained flat at $324.9K.

ORLANDO, Fla. – Florida’s housing market in June and second quarter (2Q) 2024 showed rising inventory levels (active listings), more new listings and moderating median sales prices compared to a year ago, according to Florida Realtors®’ latest housing data.

“Florida’s economy and lifestyle continue to attract people who want to live and work in the Sunshine State – more than 1,000 people move here every day, according to Census data,” said 2024 Florida Realtors® President Gia Arvin, broker-owner with Matchmaker Realty in Gainesville. “Higher mortgage rates, rising prices and other factors continue to affect home sales, despite demand from would-be homebuyers.”

Last month, closed sales of existing single-family homes statewide totaled 23,183, down 11.1% year-over-year, while existing condo-townhouse sales totaled 8,339, down 20.5% over June 2023, according to data from Florida Realtors Research Department in partnership with local Realtor® boards/associations. For 2Q 2024, statewide existing single-family home sales totaled 74,117, down 2.2% from 2Q 2023, while statewide existing condo-townhouse sales totaled 28,982, down 9.2% year-over-year. Closed sales may occur from 30- to 90-plus days after sales contracts are written.

Florida Realtors Chief Economist Dr. Brad O’Connor said the data may show a different picture next month, with better year-over-year figures for closings possible in July but “it would be tough to say for sure if we’ll exceed last July’s totals.

“If we look at pending inventory for June – that is, the number of properties that were under contract as of the end of the month – we can see that the gap between last year and this year is quite close for single-family homes (-2.5%), indicating we could see similar numbers of closed sales in the next month or two,” he said. “But that’s dependent on these under-contract homes going all the way through closing, which we know is not always guaranteed. The gap for townhouses and condos is a bit larger than that for single-family homes (-7.9%), although it is still more favorable than we’ve seen in recent months.”

The statewide median sales price for single-family existing homes in June was $427,000, up 1.7% compared to June 2023, while the statewide median price for condo-townhouse units was $324,900, basically the same as a year ago.

For 2Q 2024, Florida’s single-family median sales price was $428,000, up 2.4% compared to the same quarter a year ago; the condo-townhouse median for 2Q was $330,000, up 1.5% year-over-year. The median is the midpoint; half the homes sold for more, half for less.

O’Connor noted that the rate of inventory growth slowed in June, likely caused by the weakest level of year-over-year growth in new listings of for-sale homes seen so far this year.

“Year to date, new listings of single-family homes for sale are up over 16%, but in June they were only up by 6% compared to a year ago,” he said. “New listings of townhouses and condos, meanwhile, are up by over 19% year-to-date, but were only up by 4.6% in June.”

On the supply side of the market, single-family existing homes were at a 4.6-months’ supply in June and 2Q 2023, while condo-townhouse properties were at a 7.4-months’ supply for both timeframes.

To see the full statewide housing activity reports, go to the Florida Realtors Newsroom and look under Latest Releases or download the June 2024 and 2Q 2024 data report PDFs under Market Data.

© 2024 Florida Realtors®

Foreign Investment in U.S. Existing Homes Dropped

 The dollar value of residential properties purchased by international buyers decreased 21.2% YoY. Florida remains the top destination for foreign buyers. 

WASHINGTON – Foreign buyers purchased $42 billion worth of U.S. existing homes from April 2023 through March 2024, retreating 21.2% from the prior 12-month period, according to a new report from the National Association of Realtors®. International buyers purchased 54,300 properties, down 36% from the previous year and the fewest number of homes bought since 2009 when NAR began tracking this data. Overall, U.S. existing-home sales totaled 4.09 million in 2023, down 18.7% from 2022, and the lowest level since 1995.

NAR's 2024 International Transactions in U.S. Residential Real Estate report surveyed members about transactions with international clients who purchased and sold U.S. residential property from April 2023 through March 2024.

Foreign buyers who resided in the U.S. as recent immigrants or who were holding visas that allowed them to live in the U.S. purchased $22.6 billion worth of U.S. existing homes, a 3.4% decline from the previous year and representing 54% of the dollar volume of purchases.

Foreign buyers who lived abroad purchased $19.4 billion worth of existing homes, down 35% from the 12 months prior and accounting for 46% of the dollar volume. International buyers accounted for 2% of the $2.1 trillion in total U.S. existing-home sales during that period.

"Historically low housing inventory and escalating prices remain significant factors in constraining home sales for American and international buyers alike," said NAR Chief Economist Lawrence Yun.

The average ($780,300) and median ($475,000) existing-home sales prices among international buyers were the highest ever recorded by NAR – and 21.9% and 19.8% higher, respectively, than the prior year. The increase in prices for foreign buyers reflected the overall price increase for all U.S. existing homes, which climbed to $392,600. At $1.3 million, Chinese buyers had the highest average purchase price, with 25% purchasing property in California. In total, 18% of international buyers purchased properties worth more than $1 million from April 2023 to March 2024.

Canada led all countries of origin in the share of foreign buyer purchases of U.S. existing homes at 13%, followed by China and Mexico (11% each), and India (10%). China was first in U.S. residential sales dollar volume at $7.5 billion, continuing a trend going back to 2013. Canada ($5.9 billion), India ($4.1 billion), Mexico ($2.8 billion) and Colombia ($0.7 billion) rounded out the top five.

For the 16th consecutive year, Florida remained the top destination for foreign buyers, accounting for 20% of all international purchases. Texas (13%) and California (11%) were second and third, respectively, followed by Arizona (5%), Georgia, New Jersey, New York and North Carolina (4% each).

All-cash sales accounted for half of international buyer transactions compared to 28% of all existing-home buyers. Non-resident foreign buyers (68%) were more likely to make an all-cash purchase than resident foreign buyers (36%). More than two-thirds of Canadian (69%) and Chinese (68%) buyers made all-cash purchases, the highest shares among the top foreign buyer nations.

"Fostering economic investment in culturally dynamic communities, businesses, and industries is a top priority for NAR," said Alex Escudero, NAR's director of global strategy. "Our work provides members and their communities with tools, resources and data to identify and highlight international investment opportunities in U.S. real estate. This supports local communities to drive economic development in markets across the country. NAR and the Realtor® brand have developed a network of more than 8,000 international Realtor® members outside of the USA and expanded our global footprint to more than 100 real estate organizations across 78 countries, providing growth opportunities by ensuring ethical and accessible markets that allow our members to make direct connections with global-minded real estate professionals and international investors."

View the full 2024 International Transactions in U.S. Residential Real Estate report at: nar.realtor/research-and-statistics/research-reports/international-transactions-in-u-s-residential-real-estate.

© 2024 National Association of Realtors® (NAR)

Buyers: Stop Waiting for Ultra-Low Rates to Return

 By Melissa Dittmann Tracey

Fed Chair Jerome Powell: Higher rates remain necessary now because bringing inflation down sustainably  is “the absolute best thing we can do for the housing market.”

CHICAGO – About 20% of real estate professionals say that many aspiring home buyers are holding out for mortgage rates to fall before making a move – with agents calling that one of the biggest factors limiting real estate transactions lately, according to the National Association of Realtors®’ “2024 Member Profile.” But the super-low rates of the past – to the likes of 2% and 3% during the pandemic – have faded further into the rear-view mirror. Economists say buyers should stop waiting because rates like that aren’t likely to return anytime soon.

Federal Reserve Chair Jerome Powell said last week that he remains committed to keeping interest rates high until a return to 2% inflation that he believes will aid a broader economic recovery (as of this week, the consumer price index was 3%). Still, Powell acknowledged, “there’s no question that higher interest rates are making it harder to buy homes in the short term … [but] the absolute best thing we can do for the housing market and for the economy is to sustainably bring inflation down.”

Freddie Mac reports that the 30-year fixed-rate mortgage has been hovering near 7% over recent weeks, and averaged 6.89% this week. Five years ago, rates were in the 3% range.

Rates aren’t likely to be at the ultra-low averages they have been over the last 10 to 15 years. “For those thinking of mortgage interest rates—the implication has a ripple effect—buyers waiting for mortgage rates to again be at once-in-a-lifetime lows are likely going to be waiting a very long time,” says Jessica Lautz, NAR’s deputy chief economist.

At this week’s 6.89% average, home buyers with a 20% down payment on a $400,000 home would likely have a monthly mortgage payment of $2,105; for a 10% downpayment, buyers would have a $2,369 monthly payment, Lautz says.

Freddie Mac reports the following national averages with mortgage rates for the week ending July 11:

• 30-year fixed-rate mortgages: averaged 6.89%, falling from last week’s 6.95% average. A year ago, 30-year rates averaged 6.96%.
• 15-year fixed-rate mortgages: averaged 6.17%, dropping from last week’s 6.25% average. Last year at this time, rates averaged 6.30%.

© 2024 National Association of Realtors® (NAR)

Reinsurance Picture Improves for Florida

 By Jim Saunders

State and industry officials say the overall insurance market has improved since lawmakers in late 2022 passed a series of changes.

TALLAHASSEE — As Florida gets ready to enter the thick of hurricane season, property insurers have seen improvements in the market for reinsurance — critical backup coverage that helps drive how much homeowners pay in premiums.

Now, it’s a waiting game as forecasters expect a busy, and potentially costly, season.

New reports by the reinsurance brokers Aon and Gallagher Re said Florida property insurers found better prices and more availability when purchasing reinsurance coverage that took effect June 1 and Monday.

“Following several years of significant reinsurance rate increases, relatively low catastrophe activity and improved results for both insurers and reinsurers, many of Florida’s insurers experienced rate reductions at mid-year for the first time in three years,” the Aon report, released Monday, said.

Similarly, the Gallagher Re report, posted last week, said: “Following three consecutive years of double-digit risk adjusted rate increases, Florida’s reinsurance market was overdue for a pause in 2024. For the most part, this is what looks to have been delivered at the 6.1 (June 1) renewal, with risk-adjusted rates on most programs either flat, or down by up to 10%.”

But the reports also suggested the reinsurance market started to have what Aon described as hurricane season “jitters” as a series of forecasts were released this spring predicting an extremely active storm season. The reports said the ominous forecasts led to higher prices and less availability of coverage for later reinsurance purchases.

“The next few months will be critical to the outlook for (reinsurance) renewals in 2025,” the Aon report said. “One outsized hurricane loss, or a series of U.S. landfalls, this season may yet see a revision to more challenging market conditions.”

Property insurers buy reinsurance and a type of financial instrument known as catastrophe bonds to hedge against risks. Being able to offload a portion of risk is vital for insurers when big storms hit.

While many homeowners might not realize it, the costs of what is known as “risk transfer” get baked into insurance premiums. High costs and tight availability of reinsurance contributed to major property-insurance problems in recent years that resulted in hundreds of thousands of Florida homeowners losing coverage or facing hefty premium increases.

With the insurance market crumbling in May 2022, state lawmakers agreed to spend $2 billion in tax dollars to temporarily provide additional reinsurance coverage to insurers. They later approved a program that effectively offered additional levels, known as “layers,” of reinsurance funded through $1 billion in state tax dollars and premiums paid by insurers.

State and industry officials say the overall insurance market has improved since lawmakers in late 2022 passed a series of changes that included helping shield insurers from costly lawsuits. Nevertheless, the state’s Citizens Property Insurance Corp., which was created as an insurer of last resort, remains by far Florida’s largest carrier, with 1.211 million customers.

Insurers rely on a combination of reinsurance bought in the private market and from the state-run Florida Hurricane Catastrophe Fund, which can provide coverage at a relatively low cost.

The Florida Hurricane Catastrophe Fund, known widely as the Cat Fund, could provide as much as $17 billion in reinsurance coverage this year if needed. But before insurers could tap that money, they would have to pay specified amounts to cover claims. The amounts would vary by insurer, but the maximum amount for the entire industry would be $9.93 billion.

To pay its portion of potential costs, the Cat Fund is projected to have $6.91 billion in built-up cash and another $3.25 billion in borrowed money, according to a May report. It could borrow an additional $6.84 billion if it needed to pay up to the $17 billion coverage limit.

The six-month hurricane season started June 1, with August, September and October typically the busiest times for hurricanes.

©2024 The News Service of Florida. All rights reserved; see terms.