As home prices remain inflated across the U.S., the definition of what a luxury home is has become a little more vague. Price point has always been one of the bigger determining factors beyond amenities and style, but median home prices in many areas have reached highs anywhere from $800,000-$900,000, reaching what was commonly luxury levels. A new report from Point2, however, has the answers on where the highest shares of luxury homes are.
Point2’s new report analyzed the housing markets of 30 large, 30 mid-sized and 30 small cities across the nation to determine how high-end they are. The determination of luxury was a price point of $1 million, as buyers with that budget are definitely out of the average homebuyer lane. The report found that while California dominates a lot of the luxury markets, there are some surprises in the smaller markets.
Top 3 large size markets:
- At 63.6%, Los Angeles, California is No. 1 with the highest percentage of properties with price tags of at least $1 million. LA also boasts the highest share of ultra-luxury homes priced above $5 million: 11.6%.
- The median home price in San Francisco, California falls at $1.3 million, so it comes as no surprise that this city comes in second with a considerable share of luxury listings (62.1%). Additionally, 7.1% of homes price at over $5 million for ultra luxury.
- Third is San Jose, California, which also has a median price of over $1 million at $1.24 million. The share of luxury homes here is 60.6%, however ultra luxury only registers at 1.1%.
Top 3 mid-sized markets:
- Glendale, California leads the charge with 65.8% of homes in the luxury share.
- Second is another city with a median price above $1 million, Huntington Beach, California, at $1.1 million. The share of luxury homes here is 62.8%.
- Next up is Oxnard, California in third, which drops down out of the 60% range to 42.6%.
Top 3 small markets:
- Finally out of California, we see East Honolulu, Hawaii leading the small markets at a luxury share of 70.5%. This is no surprise as the median home price here is $1.3 million.
- Next is Bozeman, Montana in second at a luxury share of 62.4%.
- North Bethesda, Maryland comes in third at a luxury share of 54.7%.
Major takeaway:
“Around this time in 2021, Point2 released a study on luxury homes in differently sized markets across the U.S. The in-depth look was prompted by news of luxury sales outpacing sales in other price segments. All this while the number of homes sold for under $100,000 fell compared to one year earlier,” said Alexandra Ciuntu, a creative writer for Point2 and author of the report. “Looking at the bigger picture, it’s more a matter of available options rather than financial preference. Specifically, elevated mortgage rates, home price spikes, a national housing shortage, and fierce competition make today’s housing market a hostile one for the average aspiring buyer. But, homebuyers with a budget of $1,000,000+ are anything but average.”
“In their 2023 luxury outlook report, Sotheby’s International Realty attributed the steady high-end sales to an explosion of personal wealth, as well as to homebuyers putting more of an emphasis on their home lives post-COVID,” continued Ciuntu. “Moreover, many high-end transactions are made in cash, so the luxury residential sector is not as affected by interest rate fluctuations.”
For the full report, click here.
