Inventory Shortage, Rising Prices Affect Luxury Market

The luxury home market has experienced the same buying frenzy seen in the middle and lower ends of the market, resulting in rising home prices and fast-moving inventory. In May, a $28 million 1.26-acre estate in Las Vegas hit the market, yet realtors worried the home would be hard to sell, reports the Washington Post. It closed less than two weeks later and set a record for the most expensive single-family home sold in southern Nevada. It surprised agents, but the National Association of Realtors found a 244.5% increase in the number of homes sold above $1 million in May 2021 compared to May 2020.

“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.

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