Inman News / HousingWire

The number of sales involving higher-end homes rose by 26% year over year, outpacing the less expensive end of the market, according to a new analysis by Redfin.

A booming stock market and a cost-saving shift toward more remote work has left many of the highest-earning Americans feeling better off financially now than they did before the pandemic.

They’re also participating in an upper echelon of the home market, prompting a surge in prices and sales at a pace unseen since at least 2013, according to a new analysis of real estate data released Wednesday by Redfin.

“In the high-end market, we’re not only seeing multiple offers—we’re seeing buyers waiving appraisal and inspection contingencies, which doesn’t normally happen,” Phoenix-based Redfin real estate agent Vincent Shook said in a statement.

For its analysis, the Seattle-based real estate brokerage divided homes into three price groups with equal shares of the market — affordable, mid-priced and higher-end — and found that the number of sales involving higher-end homes rose by 26 percent year over year in the three-month period ending April 30. 

This gap is partly a reflection of abnormally low housing activity during the early days of the pandemic. But the market for pricier homes has ramped back up faster than it has for houses on the more affordable end of the spectrum, according to Redfin’s numbers. 

Homes in the middle price range saw sales grow by 15 percent over the same period, while the least expensive group saw an 18 percent rise, the report said. 

This trend was more pronounced in some parts of the country than others.

In Texas, all five of the state’s most populous cities — Houston, San Antonio, Dallas, Austin and Fort Worth — actually saw sales dwindle year over year in the more affordable end of their respective home markets, according to Redfin’s report. This coincided with even steeper drops in new listings of these lower-priced homes.

But even as more affordable houses became harder to find in these big Texas cities, the number of home sales in their most expensive ranges still ballooned.

In the highest-price range of homes Redfin analyzed nationwide, half sold for more than $440,000, while half sold for less. This compares to median prices of $280,000 for the mid-price group and $189,500 for the least expensive one. Some homes on the extreme ends of the market were excluded.

Upper-income Americans were more likely to say their financial position improved since before the pandemic than lower-income groups, Pew Research Center found in a January survey of more than 10,000 adults. 

Among those who put money away each month, nearly one-third of higher earners told Pew they were able to save more than they had before, while another half said they were saving about the same amount.

And while home prices have been rising across the board for a while across all three groups, Redfin has seen faster price growth among the most expensive properties as well.

“As the economic recovery starts to touch more middle-class Americans, we expect to see price growth accelerate for affordable and mid-priced homes,” Redfin Chief Economist Daryl Fairweather said in a statement. 

Some areas of the country are already bucking the trend.

Cleveland saw a 42 percent rise in new listings year over year in its most affordable range during the three months ending in April. The number of sales in this price range in Cleveland increased by 18 percent, even as sales slowed down in mid-range and higher-end groups.

The home markets in Indianapolis and Milwaukee followed a similar pattern, with shrinking markets for higher-priced homes and growth in sales numbers for lower-priced listings.

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Home sales on properties labeled as “expensive” or “high-end” have skyrocketed in California’s Bay Area, Miami and Las Vegas in 2021, and overall purchases of high-end homes in the country jumped 26% year over year during the three months ending April 30, according to a recent study from Redfin.

“Affordable” and “mid-priced” home purchases rose 17.8% and 14.8% year over year, respectively.

Redfin classified high-end homes as being sold for at least $440,000; mid-priced homes as being sold for at least $280,000; and affordable homes as being sold for at least $189,500, all during the three month period ending April 30.

Listings of high-end homes rose 19.3% year over year during the three months ending April 30, outpacing a 13.9% gain in affordable listings and a 9.1% increase in mid-priced listings. The typical high-end home for sale during the three months ending April 30 spent 26 days on the market — 23 fewer days than the same period in 2020. Affordable homes spent 24 days on the market (12 fewer days than a year earlier) and mid-priced homes spent 20 days on the market (18 fewer days than a year earlier).

Homes in every price tier are selling in less than four weeks, per the study.

San Francisco saw an 82.4% rise in purchases of expensive properties during the three months ending April 30 — the biggest gain among the 50 most populous U.S. metropolitan areas. Next came Oakland, California (+71.8%), Miami (+70.4%), San Jose, California (+66%) and Las Vegas (+64.4%).

Phoenix was the top destination for Redfin.com users looking to move to a different area in April, with Austin and Miami not far behind.

In Texas, Houston, Dallas and San Antonio all saw at least a 40-day decrease in the median number of days on the market for high-end homes during year over year. In the entire country, no metro had a larger decrease in median number of days on the market for high-end homes than New Brunswick, New Jersey (45 day decrease) year over year.

For the three month period ending April 30, all three tiers of homes in Denver stayed on the market for an average of only four days — a testament to the current popularity of Colorado with prospective buyers.

Redfin Chief Economist Daryl Fairweather said high-end sales growth in Florida is being fueled by an influx of affluent out-of-staters, while the gain in the Bay Area is more of a recovery from the massive decline in sales the region experienced at the start of the pandemic when scores of Americans left big cities in search of areas of the country with more, less expensive space.

“Growth in high-end-home sales is currently skewed toward some of the most expensive markets in the country, like the Bay Area and parts of Florida, which is fueling an uptick in high-end home prices,” Fairweather said. “Folks may be starting to feel more comfortable putting down roots in major hubs now that they’re gaining clarity on post-pandemic life.“

Sales of “luxury homes” rose 41.6% year-over-year in the first quarter of 2021, crushing sales of affordable homes (7% increase) and mid-priced homes (5.9%), per an April report from Redfin. Redfin defines “luxury” homes as selling for an average of $975,000.

The largest increase in luxury-home sales in the first quarter was Miami, with sales up 101.1% from a year earlier. Miami was followed by San Jose (up 92.3%), Oakland (up 82%), and Sacramento, California (up 79.3%) and Las Vegas (up 72.7%). 

Lack of inventory, a national housing issue following the onset of the pandemic, isn’t an issue for luxury homes. In fact, the number of luxury homes for sale fell only 5.1% year over year in the first quarter, the smallest decline of all five price tiers. The supply of affordable homes for sale, however, slumped 14.9%, and the supply of mid-priced homes dipped 19.8%.

“[Selling] isn’t as big of an issue for luxury homeowners since there’s a relative abundance of high-end homes to choose from,” Fairweather said.