Sales of homes priced above $1 million in Houston are experiencing a notable increase, indicating a robust performance in the luxury segment despite the general market’s challenges with rising mortgage rates. In January, luxury home sales surged nearly 21% compared to the previous year, according to the Houston Association of Realtors (HAR). This is a stark contrast to the overall Houston housing market, which saw a modest increase of just 1.3% for the same period.
This upward trajectory in luxury home sales continues a pattern observed in the previous year, where sales in this segment grew by 13%, while the overall market recorded merely a 1.3% rise. Several factors contribute to this trend, particularly the financial flexibility of luxury buyers to navigate the higher mortgage rates which hovered around 7% through 2023 and 2024, as reported by Bankrate.
Harris Benson, a broker associate with Douglas Elliman, underscores that affluent buyers have the advantage of alternative financial strategies. These include leveraging other financial accounts, liquidating stocks for cash, or accessing unconventional financing solutions. “The lower the price point, the more rate-sensitive homebuyers are,” Benson explains, highlighting the resilience of wealthier individuals in the face of fluctuating interest rates.
Market insights from Redfin reveal that higher income earners have reaped benefits from a thriving stock market and increased home equity over recent years. Nationally, 43% of luxury buyers opted for all-cash transactions during last spring’s homebuying season. This aligns with a survey by Sotheby’s International Realty, indicating that about 75% of its luxury clients paid in cash in 2024.
In the realm of ultra-luxury, or homes priced above $10 million, there’s also a notable trend of cash transactions. Katie Forney, a sales associate with Compass Real Estate in Houston, observes a stable ultra-luxury market in the city. While sales of these high-end properties remained flat at six last year according to HAR, Houston still witnessed significant transactions, including a home selling for over $20 million at 3630 Willowick—the second most expensive deal in the city’s history.
Forney suggests that the ultra-luxury segment in Houston could further expand with the growth of inventory and the anticipated transfer of wealth from Baby Boomers to their heirs. Additionally, business-friendly policies from the new administration are expected to foster a conducive environment for well-heeled buyers, as noted in a recent Compass report.
While the Dallas-Fort Worth metro area saw an increase in ultra-luxury sales, Houston’s market remains robust and healthy. Off-market deals, such as those in prestigious neighborhoods like River Oaks, also contribute to the vibrancy of this segment.