Luxury-Home Values Now Rising Faster Than Typical Homes

(8/10/24) If you’re the owner of a luxury home – defined as the most valuable 5% of homes in any given region – then I have good news for you. 

Luxury-home value growth, which has consistently lagged the market’s middle tier for the past few years, is now outpacing appreciation on typical homes, according to a Zillow analysis released on July 31.

The typical luxury home nationwide is worth about $1.62 million, with values varying by market, from a low of just under $750,000 in Buffalo, N.Y. to more than $5.3 million in San Jose, Calif., the Zillow report found.

Luxury home values nationwide are 3.9% higher than they were a year ago. That’s faster appreciation than the 3.2% annual growth for a typical (non-luxury) U.S. home. Zillow found that for every month from January 2019, the earliest period available, through January 2024, typical home values outpaced luxury homes year-over-year. For every month since, luxury-home values have been growing faster.

"Luxury homes can be challenging to sell because the pool of buyers is so much smaller, said Anushna Prakash, economic research scientist at Zillow, in a written statement. “That's one reason prices for them usually grow more slowly.”

Austin is the only major market where luxury-home values declined over the past year, down 1.5%. That’s because home values in Austin had a meteoric rise during the pandemic, and a building boom in response to that demand helped lessen competition for each home and brought price growth under control.