5 Cities Where Luxury Homes Continue To Appreciate

Have your eye on a luxury home? Don’t hold your breath waiting for prices to drop. Home prices are still steadily climbing in 2024, and in some cities, luxury home prices are rising even faster.

Realtor.com published a report of 10 cities with skyrocketing luxury home prices in May 2024. This article looks into the top five cities from that article, plus a few insights into the luxury home market.

What Is a Luxury Home?

You may have an image of a luxury home in mind: high ceilings, five-plus bedrooms and a pool. However, one person’s definition of “luxury” doesn’t necessarily apply to everyone. So, how do professionals define a luxury home?

Luxury real estate isn’t just about listing price. It comes down to a number of factors, including location, construction quality, amenities and relative price for the area. That last factor is most relevant to this article — in these five cities, luxury home prices are soaring in comparison to standard homes. 

Why Are Luxury Homes Getting More Expensive?

Luxury home prices hit an all-time high in January 2024. Since the economic downturn that started with the COVID-19 pandemic, luxury prices have risen at twice the rate of standard home prices — and that pace doesn’t seem to be slowing down this year.

That fast climb is partly due to low inventory, as fewer luxury homes were built in the years following the pandemic. It may also be because wealthier homebuyers aren’t as affected by rising mortgage rates. In other words, supply in the luxury real estate market is low and demand is still high, leading to higher and higher prices.

5 Cities With Soaring Luxury Home Prices

Here are the top five cities listed in the Realtor.com article. Some of these locations may surprise you — luxury prices don’t necessarily reflect standard prices in that area. An influx of retirees, changing demand among wealthy homebuyers and the popularity of vacation homes are driving demand for luxury homes in these destinations.

1. West Palm Beach, Florida

West Palm Beach is a city near the coast of Southern Florida. Popular among retirees and vacationers, this city offers bustling shopping centers, high-end restaurants and plenty of local wildlife. West Palm Beach is historically known as a quieter and more affordable alternative to its neighbor, Palm Beach, which is one of the most expensive cities in Florida. However, as luxury home prices continue to rise, West Palm Beach may no longer be the affordable retiree haven it once was.

• Most expensive 5% of listings in April 2020: $1,653,750+
• Most expensive 5% of listings in April 2024: $4,486,250+
• Increase: 171%

2. Savannah, Georgia

Savannah is a classic Southern city known for its rich history, culture, shopping and more. It also offers a relatively low cost of living. According to Realtor.com, rising luxury home prices in Savannah reflect the growing demand for Southern luxury: historic homes with sprawling lawns, ancient trees and Southern style. 

• Most expensive 5% of listings in April 2020: $1,307,175+
• Most expensive 5% of listings in April 2024: $3,103,000+
• Increase: 137%

3. Lake Havasu City, Arizona

Another popular destination for vacationers and retirees, Lake Havasu City offers year-round sunshine and plenty of outdoor activities around scenic Lake Havasu. This city has a limited job market but a tight-knit community of locals, many of whom are retired.

• Most expensive 5% of listings in April 2020: $925,125+
• Most expensive 5% of listings in April 2024: $1,954,375+
• Increase: 111%

4. Reno, Nevada

Reno is a vibrant city nestled in western Nevada. Its proximity to Lake Tahoe and the Sierra Nevada mountains makes it a popular destination for those who love the outdoors. Wide-open space and relatively cheap land in the area have also made it a popular choice for retirees to build or buy spacious luxury homes.

• Most expensive 5% of listings in April 2020: $1,709,750+
• Most expensive 5% of listings in April 2024: $3,436,950+
• Increase: 101%

5. East Hampton, New York

The Hamptons have long been seen as a luxury tourist destination, where many celebrities and wealthy New Yorkers spend their summers. In East Hampton, demand for vacation homes has driven luxury prices to nearly double in the last four years. Realtor.com attributes these rising costs partly to the era of remote and hybrid work, which allows wealthy buyers to permanently relocate.

• Most expensive 5% of listings in April 2020: $7,607,000+
• Most expensive 5% of listings in April 2024: $14,756,250+
• Increase: 94%