Luxury Homes Are Getting Less Expensive — But They’re Selling Faster

The luxury housing market is sending an interesting message to home buyers: prices at the high end of the market have been cooling, but luxury homes are actually selling faster.

At first glance, those two trends may seem contradictory. If luxury home prices are declining, wouldn't that mean demand is weakening and homes should be sitting on the market longer?

Not necessarily.

Recent housing-market data shows that the luxury segment is behaving differently from much of the traditional housing market. For buyers considering a luxury home in South Jersey, the Philadelphia area, or elsewhere in New Jersey and Pennsylvania, understanding these trends can help when deciding when to buy, how aggressively to negotiate, and—just as importantly—how to structure the financing.

What Is Considered a Luxury Home?

The term "luxury home" can mean different things depending on where you live.

A $900,000 property might be considered a luxury home in one community, while that same price could be relatively common in another market. In highly desirable coastal communities, major metropolitan areas, and certain affluent suburbs, luxury pricing can reach several million dollars.

For market-analysis purposes, however, luxury housing is often defined by price percentile rather than by a specific type of property.

According to a recent analysis from the National Association of Realtors' consumer real estate website, the luxury market is represented by the top 10% of home listings nationally.

Using that measurement, the national entry point for a luxury home is approximately $1,277,907.

That threshold is down about 1.7% from the previous year, and the national luxury threshold has now declined for 27 consecutive months.

For prospective buyers, that creates an interesting opportunity.

Luxury Home Prices Have Been Cooling

The decline in the national luxury threshold doesn't mean luxury real estate is suddenly inexpensive. It does, however, indicate that some of the extreme pricing pressure seen during and following the pandemic-era housing boom has moderated.

Luxury buyers may now find opportunities that simply weren't available when inventory was extremely tight and bidding wars were common across nearly every segment of the market.

Depending on the individual property and local market, buyers may encounter:

• More realistic asking prices

• Price reductions on certain listings

• Greater negotiating opportunities

• Seller concessions in some situations

• More inventory to choose from

• Opportunities to negotiate repairs or closing terms

But there is an important catch.

Luxury homes are selling faster than they were a year ago.

And that trend has been seen across every luxury price tier.

Lower Prices Don't Necessarily Mean Less Competition

This is where today's luxury housing market gets particularly interesting.

While national luxury pricing has softened, the pace of sales has increased.

That suggests buyers shouldn't automatically assume that a luxury property will sit on the market simply because the asking price is high.

When an attractive home is priced correctly—particularly in a desirable neighborhood—qualified buyers may move quickly.

For someone shopping for a luxury home in South Jersey or the Philadelphia suburbs, preparation can therefore be extremely important.

The time to begin discussing financing isn't necessarily after you've found the perfect house. Having the financing strategy worked out beforehand can put you in a much better position when the right property appears.

Why Some Luxury Markets Behave Differently

Location matters tremendously in luxury real estate.

Anthony Smith, a senior economist cited in the analysis, noted that cooling luxury prices can mean something very different in highly desirable vacation markets such as Nantucket, Massachusetts, or Breckenridge, Colorado.

The reason is simple: scarcity.

You can build another house.

You can't build another coastline.

You can't manufacture another mountain view.

The same principle can apply—on a different scale—to desirable real estate markets throughout New Jersey and Pennsylvania.

Consider properties near the Jersey Shore, homes in established high-end neighborhoods, waterfront properties, larger parcels in areas where land is increasingly scarce, or architecturally distinctive homes.

Buyers aren't simply purchasing square footage.

They're purchasing location, lifestyle, privacy, views, land, amenities and scarcity.

That distinction helps explain why certain luxury properties can remain highly competitive even when broader housing statistics suggest that prices are cooling.

What This Means for Luxury Home Buyers in South Jersey

National statistics are useful, but real estate is ultimately local.

A luxury property in Cherry Hill, Haddonfield, Moorestown, Washington Township, Mullica Hill, Medford, or the Jersey Shore can behave very differently from a similarly priced property elsewhere in the country.

That's why buyers shouldn't make an offer—or determine what they can afford—based solely on national housing headlines.

A strong luxury-home strategy should consider the local market, available inventory, property taxes, insurance costs, financing options, cash reserves, and the buyer's overall financial picture.

And when the purchase price moves into higher ranges, the mortgage strategy becomes increasingly important.

Luxury Home Financing and Jumbo Loans

Many luxury home purchases require financing above the conforming loan limits established for conventional mortgages.

That's where jumbo mortgage financing may come into play.

A jumbo loan is generally a mortgage that exceeds the applicable conforming loan limit for the property and location. Because these loans aren't structured exactly like standard conforming mortgages, qualification requirements and available programs can vary significantly.

Depending on the lender and loan program, jumbo mortgage underwriting may place additional emphasis on:

• Credit history

• Debt-to-income ratio

• Income documentation

• Liquid assets

• Cash reserves

• Down payment

• Property type

• Appraisal

• Overall borrower financial strength

But one of the biggest misconceptions about luxury home financing is that every jumbo loan requires an enormous down payment.

That isn't necessarily the case.

There are a variety of jumbo mortgage programs, and the appropriate structure depends on the borrower's financial situation, purchase price, property, available assets and long-term goals.

Should You Make a Large Down Payment on a Luxury Home?

Having the ability to put a large amount of money down doesn't automatically mean doing so is the best financial decision.

For example, a buyer purchasing a $1.5 million home might have enough liquid assets to make a very substantial down payment.

But should they?

The answer depends on the buyer's broader financial strategy.

It may make sense to compare several options, such as putting more money down to reduce the mortgage payment versus keeping additional money liquid for investments, renovations, business needs, emergencies or other opportunities.

There isn't one universally correct answer.

That's why luxury home financing should be approached as a financial strategy rather than simply a mortgage application.

Getting Pre-Approved Before Shopping for a Luxury Home

In a market where desirable luxury properties are selling faster, a strong mortgage pre-approval can become especially valuable.

Sellers of higher-priced properties want confidence that a prospective buyer can actually complete the transaction.

A thorough pre-approval can help identify potential issues before an offer is submitted and allow buyers to understand exactly how different purchase prices, down payments and loan structures affect their monthly payment and cash requirements.

For buyers considering a jumbo mortgage in New Jersey or Pennsylvania, starting early can be particularly helpful because higher-balance transactions may involve additional documentation.

The goal is simple:

When the right house becomes available, you want to be ready to act.

Don't Forget Property Taxes, Insurance and Total Monthly Cost

Luxury buyers should also look beyond the mortgage principal and interest payment.

This is particularly important in New Jersey, where property taxes can significantly affect the total monthly housing expense.

Two homes with identical purchase prices could have substantially different monthly carrying costs depending on their municipality, property taxes, homeowners insurance, flood insurance requirements, HOA fees and other expenses.

For a Jersey Shore property, flood-zone considerations and insurance costs can become especially important.

A good mortgage analysis should therefore look at the complete monthly housing expense, not simply the loan amount or interest rate.

Luxury Home Buyers May Have More Options Than They Think

Higher-income borrowers often have more complicated financial profiles.

You might be self-employed.

You may own multiple properties.

A significant portion of your compensation might come from bonuses or commissions.

You might have investment accounts, business assets, rental income or other sources of income that don't fit neatly into a traditional mortgage application.

That doesn't necessarily prevent you from qualifying for a luxury home.

It simply makes it more important to review your financial picture early and determine which mortgage program and loan structure make the most sense.

Is Now a Good Time to Buy a Luxury Home?

There isn't a single answer that applies to every buyer.

But the combination of cooling luxury prices and faster luxury-home sales makes the current market worth watching.

Buyers may have opportunities to purchase below the pricing levels seen during the hottest periods of the housing market, but attractive homes aren't necessarily sitting around waiting for offers.

In other words, today's market may reward buyers who are both patient and prepared.

You don't necessarily need to rush into a purchase.

But you also don't want to begin figuring out financing after the right property has already attracted several other interested buyers.

Buying a Luxury Home in New Jersey or Pennsylvania?

If you're considering purchasing a higher-priced home in South Jersey, the Jersey Shore, Philadelphia, or the surrounding Pennsylvania suburbs, we can help you review the financing before you begin making offers.

Whether you're looking at a traditional conventional mortgage, jumbo loan, high-balance financing, or another mortgage strategy, the first step is understanding the numbers.

We can review different purchase prices, down-payment scenarios, estimated monthly payments, property taxes, cash-to-close requirements and available loan options so you can make an informed decision.

The luxury market may be changing—but good properties in desirable locations can still move quickly.

Before you find the house, let's make sure you're ready to buy it.

Mortgage programs, rates, terms and qualification requirements are subject to change and borrower approval. This information is for educational purposes and is not a commitment to lend.