Luxury Homes Prices Biggest Drop Recorded

Luxury home remains a part of an ideal American dream but even the rich may think it's becoming way too pricey at this point.

CNBC reports that the prices for the homes only afforded by the wealthy have posted the first drop since 2012. In the same report, based on the analysis provided by Redfin real estate company, "prices for luxury homes - defined as the top 5 percent of each of the 600-plus U.S. markets it measures - fell an average 2.2 percent in the third quarter compared to the same period last year."

It is significant considering that the average price increase in the rest of the housing market is 3.8 per cent. It could be because the buyers are pulling back doe to "volatility in financial markets and "concerns about liquidity."'

Mia Simon, a Redfin agent in San Francisco, said "Luxury buyers don't buy because they need a place to live... so they have flexibility to time a home purchase when the market is favorable."

In the same report, Redfin adds that on the average, the list price of $1 million-plus homes on the market surged 5 percent to $2.5 million in the third quarter as compared to the same quarter last year. Since 2012, such price was the highest average recorded.

But despite this, the sales  volume of luxury homes remains strong. Homes prices at $1 or above increased at 17 percent in the third quarter the previous year and those priced at $5 million pr higher also climbed at 15 percent.

Redfin's chief economist, Nela Richardson, said, "The luxury market was the first to recover from the housing downturn, and now it's a bellwether of slowing price growth for the rest of the market," Richardson said. "Sales at the top end of the market continue to soar, but prices are downshifting."

To date, the most expensive home sold during the quarter was a penthouse of Faena House Miami to billionaire hedge fund honcho Ken Griffin. Another mansion was sold $47.5 million, the second highest. It's located in Belvedere, California.

Outside New York City, Newport Beach, California had a highest number of million-dollar sales in the third quarter, which totaled to 107.