Categories: South Salem

Luxury Home Price Gains Slower Than Rest | South Salem Real Estate

Given the recent string of record-breaking sales of ultra-luxury homes –$147 million in East Hampton, $120 million in Greenwich–one might get the idea that the value of high-priced abodes is skyrocketing. But that’s not the case at all. In fact, it turns out that prices for non-luxury homes are rising much faster.

To get at the real numbers, we asked Trulia TRLA +2.15% and Zillow Z +0.89% to cull their data on home prices. Looking at all for-sale, non-foreclosure listings, Trulia found that from May 2013 to May 2014, national home prices rose 6% in top-tier neighborhoods (zip codes where prices are in the top 10% for each city). Prices in neighborhoods not in the top tier rose at a significantly higher rate of 9.3%.

The trend is a reversal from the prior year (May 2012 to May 2013), when national home prices in luxury zip codes rose 9.2% and non-luxury rose 8.4%. (Before that, from May 2011 to May 2012, price gains in both luxury and non-luxury zips were about the same: 0.4% and 0.3%, respectively.)

Looking at the data another way, Zillow explains part of the reason that non-luxury prices are growing faster than luxury. As the graphic below shows, the top third of the residential market fell less dramatically during the housing crash than the bottom third of homes. It’s also come up less in the past three years–but it had less far to travel to recover.