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IPFS News Link • Housing

Luxury-Homes Sales Plunge 18% Amid Interest Rate Shock

• by Tyler Durden

A new Redfin Corp. report shows sales of luxury homes tumbled 17.8% year over year during the three months ending April 30, the most significant drop since the start of the virus pandemic. Two other times in the past decade saw steeper declines, both in the early days of the pandemic before the exodus out of metro areas. 

"The luxury market is cooling as soaring interest rates, a tepid stock market, inflation and economic certainty put a damper on demand. For a luxury buyer, a higher mortgage rate can mean a monthly housing bill that's thousands of dollars more expensive," Redfin said.

The slowdown in luxury home sales began in the summer of 2021. There was also a shortage of luxury homes on the market as wealthy remote workers fled metro areas for tax-friendly rural towns and states. Redfin notes the "inventory crunch has started to ease."

Elena Fleck, a Redfin real estate agent in West Palm Beach, Florida, brings up a very important topic, something we've outlined to readers of what would crack the housing market: The emergence of the housing affordability crisis

"The pool of people qualified to purchase luxury properties is shrinking because the stock market is falling and mortgage rates are rising," Fleck said.