Luxury housing markets across the U.S. have seen declines in 2016, but according to a new analysis from Redfin, few markets have slowed more than Houston.
Through Q1 2016, the average sale price for luxury homes in Houston was $1.377 million, a 5.1 percent decline from Q1 2015. That was the seventh-largest such decline in the country, and meanwhile, the average sales price for the rest of the Houston market rose 0.9 percent to $232,000.
What Ails Luxury Housing
What could be behind the declines in luxury housing? According to Redfin’s report, there are two major causes – the fluctuations in the stock market and the strong U.S. dollar.
On the stock market side, falling shares negatively impact high-net-worth consumers’ portfolios, making them less likely to purchase pricey real estate. And though a strong U.S. dollar has some benefits – for instance, goods from other countries are cheaper – it also makes American real estate more expensive to foreign consumers, who have a large presence in luxury markets across the country.
Redfin Chief Economist Nela Richardson explained: “Luxury buyers are out of step with the rest of the market because their wealth is at stake. Instead of cheering rock-bottom mortgage rates, luxury buyers recoiled from high-end spending in the face of volatile asset prices.”
Here is a chart showing how luxury markets have stalled across the country:
|City||Avg Sale Price –Luxury||YOY Change||Avg Sale Price – Rest of Market||YOY Change|
|Pompano Beach, FL||$1,123,000||-4.2%||$197,000||4.2%|