The past four years have been the ride of a lifetime for sellers in the luxury housing market. But those days are gone.
Last month, 7.8 percent of homes across the country priced for at least $5 million had been subject to a price cut, according to Realtor.com data reported by the Wall Street Journal.
That’s an increase of 1 percent from the same period last year and a 3 percent jump from March 2022. It also represents the most cuts seen at the price point since Realtor.com started tracking in 2017.
The reasons for the luxury listing price cuts vary between markets. Factors dogging the entire country include elevated interest rates, macroeconomic concerns and sticker shock that has buyers being more selective about making offers and closing deals.
“[Sellers] don’t want to let go of the number that they could have had during Covid,” the FAB Property Group’s Monica Fabbio told the Journal.
The correction is being felt most acutely in markets that boomed the most during the pandemic.
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In Austin, 18.7 percent of homes on the market last month for at least $5 million had seen at least one price cut, according to Realtor.com, representing the metro area with the largest share of luxury price reductions. In Phoenix, the share of equivalently priced homes with price cuts was 13.6 percent, while in Tampa, the share was 12.8 percent.
“We were chasing the market up for so long from a pricing perspective,” Fabbio added. “At some point, the merry-go-round stopped.”
The luxury market at large took a dive last year, when $1 million home sales declined 24.2 percent from the previous year, according to Realtor.com, and 26.5 percent from 2021. In January, these sales actually increased 11.9 percent year-over-year, but remained below the January 2021 and January 2022 levels.