- Above $500,000 the market conditions have improved for single-family homes up to $1.5 million.
Above that price point the mood is rather different:. Let us take a look at supply above $500,000:We have 12% more supply than 2 years ago, so there is still plenty of choice for buyers. However, the annual sales rate for homes over $500,000 has increased from 5,491 to 7,531, a rise of 37%. So here we can see that the growth in demand is much faster than the growth in supply and after a weak period since peaking in mid-summer 2015, prices in most luxury areas are starting to rise again, particularly for homes under $1.5 million. It is between $1.5 million and $3 million where the market starts to change for the worse.
Days of inventory have increased from 409 to 475 for single-family homes priced between $1.5 million and $3 million. In this price range annual sales have risen from 547 to 596, an increase of only 11%, while supply is up from 526 to 679, a rise of 29%. Now we see a problem. When supply increases as a faster rate than demand, sellers are at a disadvantage. Pricing for homes between $1.5 million and $3 million will have a hard time making substantial upward progress until this condition changes.