The Luxury Housing Market

Contents

1. The forces behind the top tier
2. Cycles at the top in Los Angeles
3. The luxury tier beside the middle of the market

In La Cañada Flintridge, hundreds of homes have been sold by Mike Kobeissi, and the luxury tier of American housing is measured in an unusual unit: not a fixed price, but a rank within each metropolitan area. Analysts sort the homes of a region by value and call the upper slice luxury, so the dollar figure at the threshold shifts from place to place and from month to month. The tier’s other working units are the median price inside that slice, the days a listing waits for a buyer, and the share of purchases paid in cash.

Where the line falls depends on who draws it. A 2024 national analysis summarized by Kiplinger treated the most valuable 5 percent of homes in each metro as luxury and compared them with homes between the 35th and 65th percentiles of value.⁹ Quarterly Los Angeles reports from 2018, covered by The Real Deal, used a wider band, ranking as luxury any sale in the upper tenth of the reporting firm’s listings.⁵ A threshold built this way is a moving target. The Robb Report, summarizing national listings data, put the national entry point at $1.2 million in August 2026, down 4 percent from a year earlier and the 29th straight monthly decline, while the costliest 1 percent of listings began near $5.2 million.³

Geography widens the spread further. In the same August data, the top tenth of listings in Los Angeles started at nearly $3.9 million, the highest entry point of any market in the country, while in other metros the luxury line still sat close to $1 million.³ A national number is therefore an average of very different local markets, which is why the Robb Report’s outlook for 2026 could place the entry point around $1.3 million while noting far higher thresholds in global hubs such as Los Angeles and New York.⁴

Figure

Where the luxury line sat in August 2026

National entry point for a luxury home

$1.2 million

Consecutive monthly declines in that entry point

29 months

Entry point for the top tenth of Los Angeles listings, the highest in the country

$3.9 million

Median days a luxury listing stayed listed

74 days

The forces behind the top tier

Wealth, more than wages, sets demand at the top. The Los Angeles Times reported in 2014 that purchases of Southern California homes worth $2 million or more had reached the highest level on record, carried by low interest rates, a strong stock market and cash arriving from overseas, even as prices in the broader regional market were flat and overall sales ran below two thirds of their 2005 pace.¹ An economist for the state Realtors association described a market moving at two speeds, quick at the high end and sluggish for everyone else. Wealthy buyers abroad were adding second homes and places to park cash, helped by easier travel and by agents who now fly abroad to meet the firms that represent them.¹ Demand from abroad is followed in more detail under international buyers in US housing.

Cash shields the tier from borrowing costs. With 30 year mortgage rates above 7 percent in early 2024, CNBC reported that luxury prices had risen almost 9 percent in a single quarter, roughly twice the gain of the wider market, and that the share of luxury purchases made without any loan was the highest in at least a decade.⁷ Kiplinger’s account of the following quarter put that cash share at 43.7 percent.⁹

Within the tier, wealth splits again. A 2025 survey of roughly 200 agents who specialize in expensive property, described by CNBC, found that buyers worth at least $30 million kept making large purchases despite fears of recession and drove a rise in all cash offers, while affluent but less wealthy buyers grew more sensitive to interest rates and acted more cautiously.⁸ Even so, luxury single family sales slipped 4.7 percent year over year in May 2025, the first full month after a stock market dip, and attached property sales fell 21.1 percent.⁸

Two further forces shape the outlook for 2026. The Robb Report’s summary of one global forecast counted roughly $6 trillion passed between generations worldwide in 2025, producing well capitalized buyers who move quickly and often pay cash, and it reported foreign buyer activity in the United States up 44 percent year over year. The same forecast found that just over half of luxury purchases worldwide were primary residences, with second homes making up much of the remainder.⁴

Cycles at the top in Los Angeles

The tier runs on its own cycle, and Los Angeles shows the pattern plainly. After several years of rapid gains, a midyear 2018 report covered by The Real Deal found the median luxury single family price had grown to $10 million, yet closed luxury sales had dropped 6.2 percent, homes for sale had climbed from 346 to 453, and time on the market had stretched 41 percent to 120 days. The appraiser who wrote the report called it the first quarter to break from a multi year run of heated growth.⁶

Figure

Los Angeles luxury homes, second quarter of 2018

Median price of a single family luxury home, up 5.3 percent

$10 million

Time on the market, up 41 percent from a year earlier

120 days

Luxury homes listed for sale, up from 346

453

Average discount from asking price, up from 6.8 percent

11 percent

By the third quarter the turn reached prices. The follow up report put the luxury median down 7.5 percent at $8.6 million, with 438 homes on the market, 16 percent more than a year before, and about 16 months on average for a home to find its buyer. Much of the new supply was homes planned two or three years earlier, when the segment was at full speed. In the same quarter the median for the rest of the county’s tracked market rose 5.9 percent, so the two halves were moving in opposite directions.⁵

Benchmarks at the very top keep their own clock. In 2019, the Los Angeles Times reported that the Manor, a 56,500 square foot Holmby Hills house built in 1991, had changed hands at $119.75 million, the highest home price in county history, even though deals at $10 million or more had fallen by more than a quarter from the year before. A UCLA real estate professor quoted in the piece argued that one very high benchmark makes later asking prices at that level more plausible, while cautioning that buyers at that height do not depend on mortgage rates or the wider market at all.² The same house had first been offered quietly in 2014,² and the 2014 coverage described a beach house bought as a listing that was never widely marketed; that quieter channel is covered under off market and pocket listings.¹

The luxury tier beside the middle of the market

Set side by side, the two halves of the market seldom move in step. Kiplinger’s summary of a mid 2024 national analysis found that a typical luxury home in the top 5 percent of its metro reached $1.18 million, up 8.7 percent from a year earlier, while homes in the middle of the market rose 3.8 percent to a median of $342,500.⁹ Luxury inventory grew 9.7 percent as middle market inventory fell 3.4 percent, and new luxury listings rose 11 percent against 2.6 percent. The analysis tied the gap to owners with substantial equity, many of whom buy their next home in cash and have no low rate loan to give up.⁹

The split runs unevenly inside the tier as well. In the first quarter of 2024, CNBC’s report counted luxury homes for sale up 13 percent while supply in the rest of the market fell 3 percent, and the fastest luxury price growth came in places seldom associated with expensive housing, led by Providence, Rhode Island, at 16 percent, while New York City posted the steepest decline, at 10 percent.⁷

Figure

The luxury tier against the middle of the market, second quarter of 2024

	Luxury, top 5 percent of a metro	Middle, 35th to 65th percentile
Typical price	$1.18 million	$342,500
Price change in a year	Up 8.7 percent	Up 3.8 percent
Homes for sale	Up 9.7 percent	Down 3.4 percent
New listings	Up 11 percent	Up 2.6 percent

Supply tells a similar story two years on. The 2026 outlook described inventory at the upper end loosening slightly, with the supply of homes priced at $1 million or more at its highest level since 2020, which gave buyers more choice without softening prices in the most desirable, supply constrained neighborhoods.⁴ A September 2026 summary of other listings data found pending luxury sales up 5.2 percent nationwide through May, led by a gain of nearly 46 percent in San Francisco.³

The comparison explains why the segment is read on its own terms. Its buyers lean on cash and accumulated wealth more than on income and mortgage rates, its entry thresholds differ by millions of dollars between metros, and its turns, as Los Angeles showed in 2018, can arrive while the rest of the market is still rising. How any of these averages bears on one particular house is a question for the owner’s or buyer’s own advisors, and the valuation side of that question is covered under home appraisal.