While the average price of luxury homes is beginning to stabilize nationwide in comparison with entry-level homes, prices are sky-rocketing by almost identical margins in every segment of the L.A. market, from starter homes to sprawling mansions, according to a new report by listings website Zillow.
The average price of a property priced in the top third of the market went up by 6.8 percent over the past year, compared to 6.7 percent for mid-market homes and 7.7 percent for starter homes, Zillow’s data show.
The company’s chief economist Dr. Svenja Gudell said the even pace L.A.’s growth in notable, particularly as other U.S. markets begin to see a stark dichotomy between price growth on the high and low ends of the market.
“The three parts of the market are actually moving together quite nicely, which isn’t the case in many markets around the country. You’re seeing less distortions at one end versus another end,” she told The Real Deal. “Demand appears to be steady across the market.”
By contrast, the nationwide average price of an entry-level home rose twice as fast as that of an expensive home over the past year, by a whopping 8 percent compared to just 4 percent for luxury homes. Nationwide, the typical entry-level home was worth $104,600 in May, a 7.9 percent rise year-over-year, while the typical top-tier home appreciated by just 4 percent, to $340,000.
The most blatant contrasts came in markets such as Denver and Miami. In Denver, the average starter home appreciated by a whopping 17.7 percent year-over-year, while luxury homes appreciated by a more modest 8.2 percent, data show.
“Buyers looking for entry-level homes are having bidding wars in many markets, while it’s not uncommon for high priced homes to stay on the market a few months longer,” Gudell said.