A dearth of available luxury homes across many major U.S. cities meant that high-end property prices ended 2015 on a positive note after a nine-month slowdown. New figures from real estate brokerage Redfin showed that average prices in the luxury market, which Redfin defines as the most expensive 5% of home sales, grew by 3.1% in the final three months of 2015 compared to a year earlier. This was driven by a low supply of luxury homes in many cities, with the number of homes for sale at$1 million or more down 6.4% for the year.
However, Nela Richardson, chief economist at Redfin, cautioned that the trend of rising prices in the luxury market may not last for long. “A slowing economy and volatile stock market have many luxury sellers on edge,” she said. “This concern is warranted in large luxury markets such as Houston, Tampa, Chicago and Miami. Instead of shifting into high gear, luxury prices in these markets declined.” The luxury market fared best in Philadelphia, Austin and Sacramento, where prices were up 25.4% to $1.07 million, 22.5% to $1.85 million and 12.6% to $830,000, respectively, compared to last year. According to Redfin, Austin’s double digit increase should come as no surprise as it'sone of the country’s fastest growing cities, while Philadelphia’s rise is linked to the sale of several multi-million-dollar condos in a new Society Hill development. As for Sacramento, agents attributed the 12.6% rise in prices to buyers relocating to the area from other parts of the state, fleeing high prices in San Francisco and Silicon Valley. In contrast, Baltimore’s luxury market suffered the largest price drop, falling 17.9% to $641,000, followed by Tampa,where prices fell 14.7% to $899,000. Luxury home prices have fallen for two consecutive quarters in Baltimore, Chicago and Houston. In Houston, prices were down 1% in the final quarter of last year compared with a year earlier at $1.4 million. “The slowdown in the Houston market is a knee-jerk reaction from buyers due to all the attention on low oil prices,” Tara Waggoner, an agent at Redfin, said. “The mindset is that we’re such an oil and gas city, but our economy is quite diversified. It’s more about the mindset than anything else right now. Houstonians are being cautious.” View full listing (pictured top)