Despite its generous amenities, real estate observers worried that the sprawling property, built by luxury home builder Blue Heron, would still be a tough sell. Las Vegas was just beginning to regain its footing after the pandemic shuttered much of the city’s economy and severely dented the upper end of its housing market. And while the number of coronavirus cases nationally was beginning to dwindle, Nevada was still seeing rising positivity rates.
But less than two weeks after it went on the market, the contemporary home clad in metaquartzite stone sold for $25 million, setting a record as the priciest single-family home sale in southern Nevada.
The transaction was one of 759 home sales through June 30 in Las Vegas above $1 million, including a condominium that fetched a record $16.25 million in June, according to Las Vegas Realtors. That figure nearly matches the 766 sales above the $1 million mark in all of 2020 and 531 in 2019.
Meanwhile, data from the National Association of Realtors (NAR) shows a 244.5 percent increase in the number of home sales in the United States priced above $1 million year over year in May. That figure far outpaces sales in the $250,000 to $500,000 price range, which saw a 47.9 percent gain during the same period.
“The market here has been steadily rising for the last three years,” says Aldo Martinez, a longtime Las Vegas real estate broker who is president of Las Vegas Realtors. “But what we’re seeing now at the top of this market is a 100 percent escalation.”
Strong demand and shrinking supply are also fueling a sharp rise in home prices in the D.C. area where the median sales price hit a record $570,000 in May, according to the listing service Bright MLS.
“Virtually every sector of this market is seeing higher demand,” says Christie-Anne Weiss of TTR Sotheby’s International Realty, a D.C.-area brokerage. She says the pandemic initially ignited a buying frenzy in suburban areas, but that has now spread across all pockets of the market, including newly built properties in the District as well as larger, more expensive homes in Maryland and Virginia.
And there are growing signs that the luxury sector in D.C. is seeing the same kinds of bidding wars typically found at the middle and lower ends of the market.
In April, the owners of a five-bedroom house for sale in Chevy Chase Village in Montgomery County accepted a contract for $4,540,000 — more than $1 million above its asking price. The accepted offer came in less than a week on the market. In May, a house on Reno Road in Northwest Washington with a price tag just under $1 million fielded 32 offers and eventually sold for $1,336,000.
“We’re actually beginning to see the kind of inventory shortage at the luxury end of this market that we would typically see at the middle and lower ends,” Weiss says.
When the pandemic hit the United States more than a year ago it fueled an economic tailspin that left the broader real estate market scrambling to adjust amid lockdowns and travel bans.
It also triggered worry among property professionals in wealthy pockets of the country, who feared the spreading contagion would deal the most severe blow to the upper end of the housing market, a sector that has long relied on a wealthy, globally connected jet set to help keep it afloat.
Yet as the country slowly reemerges from shutdowns and some covid restrictions, housing sales are soaring, fueled by a pandemic that ignited a frenzy of transitions in virtually every corner of the United States.
Home buyers craving more space rushed to purchase bigger homes while a rising number of people working remotely in pricey property markets pulled up stakes and moved to less expensive cities. Buyers have been aided by historically low mortgage rates and a rising stock market that has ballooned their wealth and expanded their budgets.
But unlike past property booms, this one is seeing a surge in sales at the top of the housing market, with more expensive properties across the United States selling nearly twice as fast as lower- and midpriced homes.
Purchases of high-end homes increased 26 percent in the first quarter compared with the same period in 2020, according to brokerage Redfin. Sales of the most-affordable properties — typically sought after by first-time buyers — rose 18 percent during the same period while homes priced in the middle of the market rose 15 percent.
Redfin’s analysis defines high-end sales as homes that rank in the 65th to 95th percentile in market value.
“Wealthier Americans have benefited greatly during the pandemic thanks to the rising stock market, which typically helps grow net wealth,” says Lawrence Yun, chief economist and senior vice president of research at NAR. “So there’s greater demand for luxury housing now and that sector isn’t as hamstrung by inventory shortages as the rest of the market.”
That expansion of wealth is fueling record real estate transactions in housing markets across the country.
Two condos at Manhattan’s 220 Central Park South sold to the same buyer in May for a combined $157.5 million, making it one of the city’s priciest residential transactions.
In Miami Beach, a six-bedroom apartment at the Continuum condo project traded in May for $30 million just two months after hitting the market. The deal came less than a month after a penthouse apartment in the same building sold for $35 million.
And nine properties in Los Angeles sold above $30 million in the first half of 2021, compared with eight in the same period in 2020, according to Multiple Listing Service data. The city has at least 16 properties listed publicly for sale priced at or above $50 million, records show.
“There was so much uncertainty when the pandemic began that many of us really didn’t know what to expect in the months ahead,” says Jon Paul Perez, president of the Related Group, a Florida-based developer with luxury properties across the state.
He says when the pandemic hit, the company had about $500 million worth of unsold inventory and mounting concerns over whether the contagion would flatten sales. But in the past year, Related has seen some of the sharpest growth in the company’s 40-plus-year history, Perez says.
“We thought it would take three years to sell this much property, but we saw a huge shift in domestic buyers after the pandemic hit and that really accelerated sales in a way that nobody could have predicted.”
The sharp rise at the top coincides with a broad and unprecedented boom in property prices overall.
Home prices in the United States surged at their fastest pace ever in April, rising 14.6 percent from the previous year, according to the S&P CoreLogic Case-Shiller National Home Price Index. That figure marks the highest annual rate of price growth since the index began in 1987.
The median existing-home price rose to $363,300 in June, up 23.4 percent from a year earlier, setting a record high, according to the NAR. Several already hot housing markets set records in May for the average price of a single-family home, including Boston, Seattle, Denver and Los Angeles.
Daryl Fairweather, Redfin’s chief economist, says she worries that skyrocketing prices at the top of the housing market will only exacerbate an already widening housing gap in the country.
“So far, the economic recovery from the pandemic has disproportionately benefited Americans with bigger bank accounts,” Fairweather said in a statement. “This means a lot of the demand for homes is coming from folks who are well-off, while many lower-income Americans sit on the sidelines because they’ve been priced out of the housing market due to surging prices.”