Luxury home sales took a significant plunge recently as the nation grapples with economic problems.
Forbes reported Monday:
Sales of luxury homes fell 38.1% year over year during the three months ending November 30, 2022, the biggest decline on record, according to a new report from Redfin, a technology-powered real estate brokerage. That outpaced the record 31.4% decline in sales of non-luxury homes. Redfin’s data goes back to 2012.
The luxury market and the overall housing market lost momentum in 2022 due to many of the same factors: inflation, relatively high interest rates, a sagging stock market and recession fears.
Meanwhile, America’s housing market is enduring its second-largest price correction since the end of World War II, according to Breitbart News.
Founding partner of Macro Trends Advisors Mitch Roschelle explained the correction is due to citizens’ uncertainty and worries over economic issues:
A couple of things are going to cause it to turn in the opposite direction, meaning home prices are going up. One is certainty. And when you don’t know if interest rates are going to go up or not. I think that is what is driving a lot of people away from buying because they just don’t know if rates are going to be cheaper in two months, and they’re just going to wait.
And the other thing is uneasiness regarding the economy. And I think the shoe to drop there would be if we start seeing layoffs, and we start seeing unemployment starting to rise, I think that could be something that causes a leg down in the housing market in a big way.
A recent poll found most Americans are still concerned about the economy under President Joe Biden’s (D) leadership, Breitbart News reported December 16.
“Out of 1,000 likely voters surveyed between December 12-13, 86 percent say they are concerned about the economy, including 60 percent who are ‘very concerned,’ reflecting an overall increase in concern since August,” the article said.
Per the Forbes report, there are indications that demand is making a comeback in the housing market as interest rates go down.
Austin Allison, Pacaso CEO and co-founder, recently spoke about the real estate industry during an interview on Fox Business, stating, “What we experienced over the course of the last couple of years was not normal, you know, homes selling in a couple of days for multiples over ask is not sustainable.”
“What we’re seeing now is a return to normalcy, so when you see the headlines that real estate is down 30 percent year over year, it’s important to remember that real estate transactions are actually still up quite a bit when compared to pre-pandemic levels,” he added.