New data from realtor.com, the official site of the National Association of Realtors, indicates the sale of U.S. luxury homes weakened slightly in 2017, with the overall housing market outperforming the still strong upper tier level of homes. Despite these findings, the luxury market remained hot in states like Hawaii, Colorado and California, which saw double-digit price gains in several local markets.
The entry-level luxury price - defined as the top 5 percent of transactions based on sales price - rose by 5.1 percent in 2017, compared to a 6.9 percent overall housing market price gain. Luxury properties also took 5.4 percent longer to sell in 2017 than they did in 2016, spending 116 days on market on average.
This slowdown is likely attributed to a growing number of luxury homes in the market nationwide. In 2017, the number of million dollar listings grew on average by 3.9 percent year-over-year and represented more than 7 percent of all homes listed in 2017.
"Although 2017 was another strong year for the luxury housing market, it was once again outperformed by the U.S. market overall," said Javier Vivas, director of economic research for realtor.com.
In an analysis of 74 counties with 100 or more $1 million transactions during the January to August 2017 period, entry-level luxury home prices in a dozen counties grew by more than 10 percent in 2017. The 10 fastest growing luxury markets experienced 12-30 percent growth year-over-year. Seattle topped the list with a luxury sales price growth of 32.73 percent year-over-year. Marin County in the San Francisco Bay Area, also ranked among the fastest growing counties, had a year-over-year luxury sales price growth of 11.63 percent.
The most expensive luxury markets in 2017wereManhattan and Brooklyn in New York City and the San Francisco Bay Area markets of San Mateo, Marin and San Francisco. New York had an average luxury sales price of $5,284,000; San Mateo, $3,370,700; Marin, $3,288,800; and San Francisco $3,212,200. Santa Clara County ranked sixth at $2,582,300.
Bill Moody, president of the Silicon Valley Association of Realtors, said homes are selling at a more rapid pace and prices at all levels are rising faster than the overall luxury home market. Moody said in the San Francisco Bay Area, currently the most competitive tier is the $1.2 million to $1.8 million market level, with buyers paying an average of 22 percent over list price.
"As a consequence of the new tax reform plan passed by Congress and signed by the President, markets with high home prices and property taxes will likely feel some impact from the reduced tax benefits of owning a home," said Moody.
National Association of Realtors president Elizabeth Mendenhall has said improving the new tax law is a top priority for Realtors in 2018. "Especially in high-cost, high-taxed markets, there's still big concern that the overall structure of the final bill diminishes the tax benefits of homeownership in a way that would adversely affect home values and sales over time," said Mendenhall.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
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