By Sam Boughedda
According to real estate agent Redfin (NASDAQ:RDFN) on Friday, luxury home purchases sunk to the second lowest on record, declining by 44.6% year-over-year during the three months ending January 31, 2023.
The technology-powered real estate brokerage’s data, dated back to 2012, revealed the decline outpaced the record 37.5% drop in sales of non-luxury homes.
The housing market has cooled significantly over the last year due to rising mortgage rates, persistently high home prices, soaring inflation, and economic concerns, resulting in confidence in the market tumbling.
“Many wealthy Americans are choosing to invest in assets other than real estate because elevated mortgage rates and softening housing prices have cast a shadow over prospective real estate returns,” said Redfin, adding that uncertainty is the primary driver of the slide.
The drop in high-end home sales was led by Miami, with luxury-home sales slumping 68.7% year-over-year. Redfin believes the markets that saw the steepest fall will likely see high-end buyers back off because they were already among the least affordable in the nation.
However, the company also said that while the housing market has slowed significantly, home prices have been propped up by a lack of supply.