US homebuyer interest in $1M homes hits record

Interest in seven-figure homes reached a record high in January despite the virus-related economic downturn, according to a recent report.

More than 10% of home searches on the platform nationwide were filtered for homes with a starting price of at least $1 million, a slight uptick from 8.5% reported a year ago, the real estate brokerage firm Redfin reported.

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Redfin said low mortgage rates and quickly rising home values during the past year have only helped persuade a "record share of homebuyers" into looking for homes priced over $1 million.

In fact, luxury home sales soared 61% in the three months ending Nov. 30, which is the biggest jump reported since at least 2013.

"In the past, anything over $1.5 million would stay on the market for several weeks, but that's not the case anymore," Seattle Redfin agent Bliss Ong said. "Even in the $2 million range, homes are selling within the first week."

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Not only are wealthy individuals able to foot the cost of moving, but they have bigger budgets to do it, according to Redfin chief economist Daryl Fairweather.

"Wealthy people are reaping the benefits of unequal recovery from the pandemic-driven recession as they earn money from robust stock portfolios and rising real estate values," Fairweather said.

However, the report indicated how the K-shaped economic recovery is "unequally benefiting affluent Americans."

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By contrast, "many lower-income people, particularly those in the service industry, are struggling financially and aren't in the market for homes," Fairweather said.

About 36% of home searches in January were filtered exclusively for homes priced under $500,000, which is down from 39.3% a year earlier.