Is luxury housing in Houston slowing down?

by Peter Thomas Ricci


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
Sandy Springs $1,546,000 -14.9% $361,000 3.1%
Miami Beach $5,738,000 -13.7% $599,000 -1.6%
Austin $1,504,000 -11.8% $352,000 5.1%
Boston $3,190,000 -11.8% $608,000 6.3%
Alexandria $1,408,000 -6.9% $440,000 -0.2%
San Diego $2,477,000 -5.9% $529,000 0.8%
Houston $1,377,000 -5.1% $232,000 0.9%
San Francisco $4,407,000 -4.7% $1,217,000 4.5%
Pompano Beach, FL $1,123,000 -4.2% $197,000 4.2%
Washington, D.C. $2,042,000 -4.2% $537,000 1.1%
Spring, TX $1,077,000 -4.1% $226,000 -7.8%
Los Angeles $4,186,000 -1.3% $690,000 10.4%
Bend, OR $1,067,000 -0.7% $379,000 6.5%
San Jose $1,960,000 -0.6% $788,000 5.3%

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