Of Caviar and Million-Dollar Mansions: Ritholtz Chart
Expensive home sales have been in the news a lot these days. The Wall Street Journal wrote about a "palatially priced" mansion in Florida listed at $139 million. The Los Angeles Times featured a Beverly Hills mansion listed at $85 million -- interestingly, it was built on speculation. Business Insider, when it isn't creating lists like the 18 most expensive Silicon Valley mansions, is writing up listings like this New York mansion that was listed for "an Insane $114 Million."
Home prices, at least according to the headlines, have run amok. Does this actually reflect the housing market, though?
In a word: No.
To put existing home sales into context, consider the chart below from the National Association of Realtors. This chart comes from the "Summary of July 2014 Existing Home Sales Statistics." (The next update will be released September 22, 2014).
As the chart shows, residential sales over $1 million account for only 2 percent of all market transactions. The $50 and $100 million-dollar houses are like caviar, an expensive rarity.
Seventy-four percent of homes sold for between $100,000 and $500,000. Those sales are the meat-and-potatoes of the residential real estate market.
The nine-figure homes make for good copy -- but they're outliers.
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To contact the author on this story:
Barry L Ritholtz at email@example.com