Prices for luxury homes in San Francisco and Seattle have fallen drastically in recent months, more than anywhere else in the country, according to recent data from Redfin.
San Francisco in particular broke a record with the median sale price of luxury homes in the area falling 12.7% year over year to $4.8 million in the second quarter, according to Redfin, which analyzed the 50 most populous U.S. metropolitan areas.
While $4.8 million is still a pretty hefty price, it's down from the record high of $5.5 million that was reached a year earlier, according to the technology-powered real estate brokerage.
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Seattle had the second-biggest drop in the country as median sale prices for luxury homes in the area fell a record 12.3% to $2.5 million.
Oakland and San Jose also saw double-digit declines with prices for luxury homes dropping 11.1% and 10.3%, respectively, the data shows.
Luxury homes in coastal markets have taken a bigger hit since they were already the most expensive in the nation, "meaning prices had more room to fall," Redfin reported, adding that tech hubs in particular took a hit.
These hubs were "disproportionately impacted by stock-market declines and tech layoffs, which have diminished buying power for high-end house hunters," according to Redfin.
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The increase in housing supply in San Francisco is also potentially contributing to the drop in prices for luxury homes in the area. It was one of just three metros that saw new listings rise during the quarter.
Still, luxury sale prices nationwide were higher than they were a year ago. According to Redfin data, the median sale price of such homes increased 4.6% year over year to a record $1.2 million during the second quarter.
Prices for non-luxury homes, by comparison, rose just 1.5% to a record $340,000.
Even though demand has slowed due to mortgage rates, which are now hovering around 7%, prices are still elevated due to a lack of supply. The limited inventory is fueling competition and effectively propping up prices in many markets.
That said, higher prices and borrowing rates aren't necessarily hurting buying power for wealthy Americans as these "homeowners can often afford to move even if it means taking on a higher rate and monthly payment," Redfin Chief Economist Daryl Fairweather said.
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Fairweather further noted that "wealthy buyers are also more likely to pay in cash, meaning they’re less likely to be deterred by elevated mortgage rates."
