The U.S. luxury housing market capped off the year with its greatest show of strength in 2019 as million-dollar sales jumped 11.4% year-over-year nationwide and sale prices increased 2.1%, according to the realtor.com Q4 2019 Luxury Report released Wednesday.
Based on the report, the final three months of 2019 was the only period to reach double-digit sales growth for luxury housing after three quarters of lackluster gains, but recent economic uncertainty could cripple luxury growth in the beginning of 2020.
“A low interest rate environment combined with a flourishing economy and record setting stock markets pushed luxury sales into the double digits for the first time as 2019 came to an end,” according to realtor.com‘s Chief Economist Danielle Hale. “Buyers jumped at the opportunity to lock in a low rate, while a build-up of luxury inventory gave buyers plenty of options to choose from compared to entry- and mid-level buyers. However, like the U.S. economy, luxury housing isn’t immune to the impacts both short and long-term of COVID-19. Many of the gains made in the luxury market in the fourth quarter could be erased as buyers are asked to stay home and sellers hunker down. It’s pretty clear that COVID-19 is going to have far reaching consequences both in the U.S. and globally, the question that remains is just how much of an impact it will have.”
Compared to the fourth quarter of 2018, which had the highest mortgage rates since 2011, mortgage rates dropped 108 basis points on average during the last three months of 2019. Driven by the sharp drop in rates, the 11% jump in sales was a welcome sight for many sellers, compared to the third quarter of 2019 where sales grew just 1%.
The volume of luxury sales increased in 59 of the 78 luxury markets tracked by realtor.com in the fourth quarter of 2019, led by Morris, N.J.; Mecklenburg, N.C.; and San Louis Obispo, Calif., which all saw growth of at least 72%. The entry-level luxury price in the 78 luxury markets reached $1.27 million in the fourth quarter of 2019, up a moderate 2.1% year-over-year.
Despite the year-over-year increase, prices grew 2.9% slower than the 5% pace of growth during the fourth quarter of 2018. At the local level, 44 of the 78 luxury markets saw sales price growth in the fourth quarter of 2019, led by Santa Barbara, Calif.; Monterey, Calif.; Eagle, Colo.; Pinellas, Fla.; and San Louis Obispo, Calif., all seeing growth of 11 to 25% year-over-year.
Six markets experienced double-digit price growth in the final three months of 2019, compared to 15 markets a year ago. California luxury markets were especially strong during the fourth quarter of 2019 as million-dollar sales grew by 10% year-over-year. Consistent with the national trend, this marked the first time in 2019 that million-dollar sales grew after three quarters of declines. Of the 18 markets tracked in California, 13 markets saw annual growth in million-dollar sales. Entry-level luxury prices in California also saw a healthy 2.7% rate of growth over last year, pushing California’s luxury entry-point to $1.97 million. Santa Barbara was the fastest growing luxury market in the fourth quarter, with prices reaching $2.88 million, up 25% year-over-year, and sales up 29% year-over-year.
| Top 20 Fastest Growing Luxury Markets | |||
| (Based on sale price growth YoY) | |||
| County | Luxury (top 5%) Sale Price | Luxury Sale Price YoY | Million Dollar Sales Count YoY |
| Santa Barbara, Calif. | 2,879,000 | 24.9% | 29.0% |
| Monterey, Calif. | 2,359,100 | 24.4% | 51.7% |
| Eagle, Colo. | 2,801,000 | 22.7% | 43.2% |
| Pinellas, Fla. | 762,500 | 12.0% | -1.6% |
| San Luis Obispo, Calif. | 1,378,100 | 10.5% | 72.1% |
| Travis, Texas | 978,700 | 9.6% | 44.1% |
| Cape May, N.J. | 1,639,400 | 9.2% | -3.9% |
| Monroe, Fla. | 1,883,500 | 8.4% | 37.5% |
| Alexandria City, Va. | 1,251,500 | 7.9% | 9.3% |
| Plymouth, Mass. | 923,400 | 7.2% | 53.8% |
| Summit, Colo. | 1,791,000 | 6.9% | 24.0% |
| Mecklenburg, N.C. | 785,800 | 6.6% | 83.3% |
| Placer, Calif. | 986,800 | 6.1% | 17.4% |
| Snohomish, Wash. | 896,000 | 6.1% | 14.6% |
| Fulton, Ga. | 1,018,000 | 5.9% | 44.7% |
| Tarrant, Texas | 570,400 | 5.9% | -17.5% |
| Arlington, Va. | 1,573,300 | 5.5% | 0.8% |
| Douglas, Colo. | 995,100 | 5.2% | 30.4% |
| Williamson, Tenn. | 1,159,800 | 5.1% | 10.4% |
| Denver, Colo. | 1,109,900 | 4.8% | 32.0% |
| Top 20 Fastest Growing Luxury Markets | |||
| (Based on growth of million dollar sales YoY) | |||
| County | Luxury (top 5%) Sale Price | Luxury Sale Price YoY | Million Dollar Sales Count YoY |
| Morris, N.J. | 1,073,000 | -0.5% | 92.9% |
| Mecklenburg, N.C. | 785,800 | 6.6% | 83.3% |
| San Luis Obispo, Calif. | 1,378,100 | 10.5% | 72.1% |
| Plymouth, Mass. | 923,400 | 7.2% | 53.8% |
| Monterey, Calif. | 2,359,100 | 24.4% | 51.7% |
| Wake, N.C. | 688,400 | 4.1% | 49.1% |
| Riverside, Calif. | 803,500 | 3.3% | 45.3% |
| Fulton, Ga. | 1,018,000 | 5.9% | 44.7% |
| Travis, Texas | 978,700 | 9.6% | 44.1% |
| Eagle, Colo. | 2,801,000 | 22.7% | 43.2% |
| Sarasota, Fla. | 852,500 | -11.0% | 41.5% |
| Monroe, Fla. | 1,883,500 | 8.4% | 37.5% |
| Montgomery, Md. | 1,301,000 | 2.6% | 36.5% |
| Orange, Fla. | 691,000 | 3.7% | 35.6% |
| Somerset, N.J. | 995,800 | -5.1% | 35.5% |
| Jefferson, Colo. | 868,800 | 2.3% | 34.4% |
| Sacramento, Calif. | 728,600 | 4.8% | 33.3% |
| Denver, Colo. | 1,109,900 | 4.8% | 32.0% |
| Maricopa, Ariz. | 741,300 | 3.0% | 32.0% |
| Chester, Pa. | 782,000 | 4.2% | 30.6% |
| Top 20 Most Expensive Luxury Markets | |||
| (Based on sale price) | |||
| County | Luxury (top 5%) Sale Price | Luxury Sale Price YoY | Million Dollar Sales Count YoY |
| San Mateo, Calif. | 3,511,300 | -4.7% | 8.4% |
| San Francisco, Calif. | 3,424,900 | 0.4% | -0.3% |
| Marin, Calif. | 3,112,300 | -6.3% | 21.9% |
| Santa Clara, Calif. | 2,898,700 | 0.3% | -2.5% |
| Santa Barbara, Calif. | 2,879,000 | 24.9% | 29.0% |
| Eagle, Colo. | 2,801,000 | 22.7% | 43.2% |
| Monterey, Calif. | 2,359,100 | 24.4% | 51.7% |
| Los Angeles, Calif. | 2,111,900 | -1.7% | 24.7% |
| Orange, Calif. | 1,963,000 | -0.3% | 10.1% |
| Monroe, Fla. | 1,883,500 | 8.4% | 37.5% |
| Summit, Colo. | 1,791,000 | 6.9% | 24.0% |
| Westchester, N.Y. | 1,681,000 | -3.7% | 8.1% |
| Alameda, Calif. | 1,678,900 | -0.2% | -16.5% |
| Contra Costa, Calif. | 1,674,200 | 4.3% | 19.4% |
| Santa Cruz, Calif. | 1,646,700 | -5.3% | -1.4% |
| Cape May, N.J. | 1,639,400 | 9.2% | -3.9% |
| King, Wash. | 1,582,900 | -0.1% | 16.9% |
| Arlington, Va. | 1,573,300 | 5.5% | 0.8% |
| Collier, Fla. | 1,544,000 | -10.0% | 14.5% |
| San Diego, Calif. | 1,536,700 | -0.2% | 21.1% |
