Luxury home sales hit new highs despite pandemic concerns

Despite its generous amenities, real estate watchers feared the sprawling property, built by luxury homebuilder Blue Heron, would still be a tough sell. Las Vegas was just beginning to regain its footing after the pandemic shut down much of the city’s economy and badly hit the upper end of its real estate market. And while the number of coronavirus cases nationwide began to decline, Nevada was still seeing an increase in positivity rates.

But less than two weeks after it hit the market, the contemporary house clad in metaquartzite stone has sold for $25 million, setting a record as the most expensive single-family home sale in southern Nevada.

The transaction was one of 759 Las Vegas home sales as of June 30 that exceeded $1 million, including a condominium that fetched a record $16.25 million in June, according to Las Vegas Realtors. This number almost matches the 766 sales above the million dollar mark in 2020 and 531 in 2019.

Meanwhile, data from the National Association of Realtors (NAR) shows a 244.5% increase in the number of U.S. home sales priced over $1 million year-over-year in may. This figure far exceeds sales in the $250,000 to $500,000 price range, which saw a 47.9% gain over the same period.

“The market here has been steadily growing for the past three years,” says Aldo Martinez, a longtime Las Vegas realtor and president of Las Vegas Realtors. “But what we’re seeing now at the top of this market is a 100% escalation.”

Strong demand and dwindling supply are also fueling a sharp rise in home prices in the DC area where the median selling price hit a record high of $570,000 in May, according to listing service Bright MLS.

“Virtually every sector of this market is seeing higher demand,” says Christie-Anne Weiss of TTR Sotheby’s International Realty, a DC-area brokerage firm. She says the pandemic initially sparked a buying frenzy in suburban areas, but that has now spread to all pockets of the market, including newly built properties in the district as well as larger, more expensive homes. in Maryland and Virginia.

And there are growing signs that the luxury sector in DC is experiencing the same kinds of bidding wars typically found in the middle and lower segments of the market.

In April, the owners of a five-bedroom home for sale in Chevy Chase Village in Montgomery County agreed to a contract for $4,540,000, more than $1 million above the asking price. The accepted offer arrived in less than a week on the market. In May, a home on Reno Road in northwest Washington with a price tag of just under $1 million had 32 bids and ultimately sold for $1,336,000.

“We’re actually starting to see the kind of inventory shortage in the luxury segment of this market that we would typically see in the mid-to-low end segments,” Weiss says.

When the pandemic hit the United States more than a year ago, it fueled an economic slide that left the broader real estate market scrambling to adjust amid lockdowns and travel bans.

It also sparked concern among real estate professionals in wealthy pockets of the country, who feared the spread of the contagion would deal the most severe blow to the upper end of the housing market, a sector that has long leaned on a wealthy, globally connected jet set to help keep it afloat.

Yet as the country slowly emerges from lockdowns and some covid restrictions, home sales are soaring, fueled by a pandemic that has sparked a frenzy of transitions in virtually every corner of the United States.

Homebuyers looking for more space have rushed to buy bigger homes while a growing number of people working remotely in expensive real estate markets have increased their stakes and moved to cheaper cities. Buyers were helped by historically low mortgage rates and a rising stock market that boosted their wealth and stretched their budgets.

But unlike past housing booms, this one is seeing a surge in sales at the peak of the housing market, with the most expensive properties in the United States selling almost twice as fast as low- and mid-priced homes.

Purchases of high-end homes rose 26% in the first quarter compared to the same period in 2020, according to brokerage Redfin. Sales of the most affordable properties – typically sought after by first-time buyers – rose 18% over the same period, while homes priced in the middle of the market rose 15%.

Redfin’s analysis defines high-end sales as homes that rank between the 65th and 95th percentile of market value.

“The wealthiest Americans have benefited greatly from the pandemic thanks to the rise in the stock market, which generally contributes to increasing net wealth,” says Lawrence Yun, chief economist and senior vice president of research at NAR. “So there’s a greater demand for luxury housing now and that sector isn’t as crippled by inventory shortages as the rest of the market.”

This wealth expansion is fueling record real estate transactions in housing markets across the country.

In Aspen, Colorado, an 11-bedroom complex overlooking downtown sold in June for $72.5 million, setting a price record for a single-family home in Pitkin County. The transaction follows the 2020 sale of a $57.25 million resort in nearby Vail, which also set a record for that area.

Two condos at 220 Central Park South in Manhattan sold to the same buyer in May for a total of $157.5 million, making it one of the most expensive residential transactions in the city.

In Miami Beach, a six-bedroom apartment in the Continuum condo project traded in May for $30 million just two months after it went on the market. The deal came less than a month after a penthouse apartment in the same building was sold for $35 million.

And nine properties in Los Angeles sold above $30 million in the first half of 2021, compared to eight in the same period of 2020, according to data from the Multiple Listing Service. The city has at least 16 properties listed for public sale at or above $50 million, records show.

“It was one of the busiest years in LA’s history for luxury deals,” says Tomer Fridman of the Fridman Group at Compass, which brokered the sale of the city’s Owlwood estate for $88 million. dollars in December. “Hardly anyone predicted it.”

These high-priced deals in expensive areas join a growing list of smaller housing markets setting records this year for the highest price paid for a home, including Naples, Fla. ($48.8 million), County of Charleston, South Carolina ($20.5 million) and Breckenridge, Colorado ($17 million).

“There was so much uncertainty when the pandemic started that many of us really didn’t know what to expect in the coming months,” says Jon Paul Perez, president of Related Group, a Florida-based promoter. which owns luxury properties throughout the state. .

He says when the pandemic hit, the company had about $500 million in unsold inventory and growing concerns about whether the contagion would flatten sales. But over the past year, Related has seen one of the strongest growths in the company’s more than 40-year history, Perez says.

“We thought it would take three years to sell this many properties, but we saw a huge shift in domestic buyers after the pandemic hit and it really accelerated sales in a way no one could have predicted. .”

The sharp rise at the top coincides with a widespread and unprecedented boom in real estate prices as a whole.

The median price of existing homes hit $363,300 in June, up 23.4% from a year earlier, setting a record high, according to the NAR. Several already hot housing markets set records in May for the average price of a single-family home, including Boston, Seattle, Denver and Los Angeles.

Daryl Fairweather, Redfin’s chief economist, says she fears soaring prices at the top of the housing market will only exacerbate an already growing housing deficit in the country.

“So far, the economic recovery from the pandemic has disproportionately benefited Americans with larger bank accounts,” Fairweather said in a statement. “That means much of the demand for homes is coming from affluent people, while many low-income Americans remain sidelined because they’ve been squeezed out of the housing market due to soaring prices.”