Bloomberg reports something surprising: As people with means look for places with plenty of room to live while self-isolating during the coronavirus pandemic, luxury housing is selling like crazy. Real estate brokerage company Redfin just released numbers indicating sales of luxury real estate went up by a remarkable 42 percent in the third quarter of 2020 compared to 2019. It was reportedly the biggest spike in seven years.
But homes more affordable for middle-income families saw a measly three percent spike and basic, affordable "starter" homes dropped by four percent.
In a statement, Redfin's chief economist Daryl Fairweather said that luxury housing markets usually take a hit "during recessions as wealthy Americans tighten their purse strings, but this isn’t a normal recession."
[The] wealthy are abandoning pricey markets like San Francisco, New York and Los Angeles in favor of high-end homes outside major cities. Areas seeing a major spike in luxury sales include California’s Inland Empire, Sacramento and Oakland, as well as Portland, Oregon and West Palm Beach, Florida.
Daryl Fairweather also said in his statement that "high-end homeowners have the financial means and the flexibility to move during this pandemic" and with a "growing supply of luxury homes for sale," the well-heeled "have more options to choose from and a better chance of finding a home that checks all of their boxes."
Unfortunately, it's a rich person's market right now. Financial hardships are causing banks to become warier than ever with credit and first-time home buyers will face real challenges in acquiring mortgages.
In short, the suburbs, once a symbol of middle-class American success, may be growing more attractive to the wealthy, but there's a danger that families in middle-income brackets may struggle in the year to come.