The most expensively listed homes in the nation’s most upscale neighborhoods may take a hit in the months to come as the nation’s housing boom levels off.
That is the conclusion of a new study conducted by the Washington-based American Enterprise Institute.
Spiked mortgage rates, jumping from 3.1% to 5.3% this spring, are contributing to an overall slowdown in housing sales activity. At the same time, according to the AEI’s Housing Center, high tier properties saw a drop of a 17.7% year over year price appreciation this February to 13% in June.
The price appreciation for low tier properties, on the other hand, had not risen as much, meaning that the decline was less severe, from 14.2% in February to 12.8% in June.
Altogether, 21 of the nation’s top 50 metro areas revealed home price decreases in June, a dramatic drop from 2021 when those prices were up by some 40% over pre-pandemic levels.
A “major, sudden slowdown is underway,” notes Fortune magazine in looking at recent pricing trends.
Because high tier properties in Florida, Texas, and Arizona, among other states, saw the greatest increases during the immediately months after the Covid 19 outbreak and well into 2021, those places may be on track to see the biggest price decreases.
Overall, luxury home sales were down by nearly 18% earlier this summer.
Despite that decline, notes the site Realtor.com, luxury home prices have not yet appreciably declined. The reason? Upscale home sellers have “yet to adjust to this new reality—the one where they can’t slap whatever price they’d like on their properties, sit back, and wait for the bidding wars to commence.”
But many analysts remain convinced that either the rate of price growth will at last slow down by the end of this year, or that the actual price of upper-end properties will finally decline.
By Garry Boulard
