Demand for luxury homes is soaring, underscoring how the COVID-19 pandemic has intensified wealth disparities in the U.S.
High-end sales jumped 42% in the third quarter from a year earlier, according to a report from brokerage Redfin. That’s the largest jump dating back to 2013. Sales of mid-priced homes climbed just 3%. Affordable purchases declined 4%.
While banks tighten credit for first-time buyers, the pandemic is hammering Americans who don’t have the privilege of working remotely. The wealthy, meanwhile, are benefiting from the surging stock market and mortgage rates near record lows.
The cheaper borrowing costs are driving demand for larger properties with more room to quarantine. And with many corporate workers no longer tethered to office buildings, there’s a shift away from expensive markets, including Los Angeles, San Francisco and New York.
“The luxury housing market normally takes a hit during recessions as wealthy Americans tighten their purse strings, but this isn’t a normal recession,” Daryl Fairweather, chief economist at Redfin, said in a statement.
Even with low mortgage rates, first-time buyers could struggle to get approved for loans or find homes they can afford in a market where inventory is scare. And while housing has been a bright spot in the pandemic economy, the migration to the suburbs has been driven by wealthier Americans.
Redfin defines luxury as the most expensive 5% of homes in a given market. High-end sales in Sacramento, 90 miles northwest of