During a period when much of the U.S. housing market has been restrained by high interest rates, low inventory and a rising median price, luxury home sales have been the outlier.
Affluent home buyers typically aren’t deterred by high interest rates. Nearly half the time, they buy in cash, according to a Redfin report earlier this year. And because they have fewer limitations on spending, luxury home prices tend to rise at a faster rate than more modest homes.
The typical luxury home in the U.S. sold for $1.225 million in the first quarter of this year, an increase of 8.7% from the same period a year earlier. That’s a little under double the pace of price growth for non-luxury homes during the same timeframe.
Among the hottest luxury housing markets in the U.S., Margate City at the Jersey Shore shows just how much high-end markets can take off in a short period of time.
The Business Journals’ Hottest Housing Markets ranking has Margate — home of the famed Lucy the Elephant attraction — third among 128 luxury markets during the third quarter of this year. The ranking defines luxury markets as those where the average home sale price tops $2 million and at least 10 sales were recorded in a quarter.
Margate, the summer destination on Absecon Island, trailed only the Cape Cod town of Osterville, on the Nantucket Sound, and Florida’s Longboat Key off the coast of Sarasota.
In the third quarter, Margate’s 27 luxury home sales averaged $2.089 million each — just making the cut for the rankings. But the stunning part of the Jersey Shore town’s rise is that the average Margate sale price has surged 298% since the third quarter of 2019. That was months before the low mortgage rates of COVID-19 pandemic triggered a frenzy of buying that elevated perceptions about the charms of Margate and coastal communities like it.
Even going back a year to the third quarter of 2023, prices are up 64% from an average sale price of $1.27 million.
Vincent Novelli, an agent with Compass Real Estate in Margate, told the Philadelphia Business Journal that low inventory in the city is the biggest driving factor behind the rise in home prices. There are rarely more than 60 active listings at any given time. There’s so little available that many homes don’t hit the market.
“We don’t have to list it on the open market,” Novelli said. “We have all these people that are kind of teed up and ready to go.”
To the north of Margate, Beach Haven came in at No. 86 in the rankings. The average home sale price there rose to $2.46 million, an increase of 12% from the same period last year.
Just behind Margate, rounding out the top five are Southern California’s Newport Coast and Southport, Connecticut.
Photo credit WWB
