However, Redfin noted that foreign investors, who once showed the most interest in these properties, have become more skittish due to their perception that there is “a steady and dramatic decline” in luxury homes in America. On the other hand, cities that are not as reliant on foreign and domestic investors are still experiencing an increase in premium home sales.
Be that as it may, the term “luxury” is not solely restricted to homes that have a value of more than one million dollars. In certain parts of California, for instance, one million dollars would barely be sufficient to purchase an average home. This makes the axiom that California is a hotbed for premium homes a rather true one, as four of the top five cities with the most expensive home values are in California, led off by San Francisco; Los Angeles (2nd), San Jose (3rd), and San Diego (5th) were the other California cities where homes were comparatively expensive. The rest of the top ten did not come with any surprises, as Chicago (4th), Houston (6th), Washington D.C. (7th, Seattle (8th), and Boston (9th) were the cities outside of California with the most expensive home sales. A fifth California city, Newport Beach, came in at tenth place.
In the 385 cities covered by Redfin’s analytic report, the average increase in million-dollar home sales was a healthy 17 percent in the September 2014 frame, with Houston (42 percent) enjoying the biggest increase in luxury home sales from the September 2013 quarter. According to Redfin, the variables leading to this increase were quite simple – it was mainly a “shift in home buyer demand toward luxury properties.”
Aside from that, the firm noted that Houston’s “strong and diverse” employment market was another variable that drove this increase, as many workers migrated to the city to take new jobs. It also helped that buying a home for $1 million in Houston was a great value proposition for these consumers.
Regarding the diminishing presence of international investors, Redfin took seven metropolitan areas – Los Angeles, Orange County and Riverside-San Bernardino in California, Miami, Orlando, and Fort Lauderdale in Florida, and Las Vegas, Nevada – and analyzed how things have changed in the year that was. Whereas growth in these markets was once 46 percent, sales had only improved by 5 percent in the September ending quarter of this year on an average. In fact, Las Vegas had negative growth numbers in the past three quarters, while growth in luxury home sales in Los Angeles and Orange County has seemingly plateaued.
Another very interesting takeaway was the paradigm shift in the above mentioned markets, as all-cash transactions from foreign investors had declined from 48 percent of all luxury sales in quarter three 2013 to only 22 percent in the recently concluded September 2014 quarter.