Luxury Homes

Metro Boston ranks 8th in the US for luxury home prices, but here comes Providence

The inventory of high-tier listings around the Rhode Island capital grew by more than 30 percent year over year in June, Zillow says.

By Sury Chakraborty

August 6, 2024

3 minutes to read

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If you’re rich, I have bad news for you. You have to get richer. 

Particularly if you live in metro Boston and around Providence.

Home values for “luxury” properties (the top 5 percent of homes in a region) in metro Boston grew 5.8 percent year over year, with a typical value of $2,698,471 in June, according to an analysis Zillow published on July 31.

In Providence, the typical value for a luxury home was $1,861,985, a 7.8 percent increase that made it the 14th priciest in the nation.

Compare these with the national average: 3.9 percent growth year over year to a typical luxury home value of $1,619,685.

And the inventory of luxury homes on the market in metro Boston grew 13.7 percent year over year, compared with the national average of 15.7 percent.

In Providence, that number grew by a whopping 30.5 percent.

Metro Boston market chugs along

Metro Boston ranked eighth overall for typical luxury home value:

(The US metro experiencing the highest growth in luxury home value in June was Richmond, Va.: 16.5 percent with a typical luxury property value of $1,152,228.)

The Zillow report states that luxury property values tend to grow more slowly because the pool of buyers is significantly smaller. In metro Boston, mid-tier homes (ones that are middle third of homes on the market) saw a 7.2 percent year-over-year increase in the typical home value.

In the United States, luxury properties are spending a median of 24 days on the market before accepting an offer. In metro Boston, it’s only 17 days — two days longer than in June 2023. In Providence, it’s 20 days.

While 20.4% percent of luxury homes on the market in the United States underwent a price cut in June 2024, only 16 percent of metro Boston properties in this price category did.

Here’s a three-year comparison for luxury listings in metro Boston and the Providence area:

What is driving the luxury home demand? 

The report posits that luxury home buyers are less affected by higher mortgage rates than typical home buyers. With mortgage rates remaining consistently high, “Many will be able to pay with cash and skip a mortgage payment altogether,” said Anushna Prakash, an economic research scientist at Zillow. 

Elaine Bannigan, founder of The Pinnacle Group at Douglas Elliman, had similar thoughts.

“A luxury buyer tends to be a cash buyer,” Bannigan said.

Our own geography may be at play as well.

“Say Pulte [Homes] comes in, and they buy a large piece of the land that happens to be available, and they put up 50 houses, or 100 houses, or 200 houses or more, in some cases, and that really makes a huge dent in the deficit. We don’t have those large tracts of land, necessarily, that are available. And so those big builders … they’re not going to come in and build 50 luxury houses,” Bannigan said. “The luxury builder tends to be the smaller custom builder who gets his hands on a nice lot in a nice location and puts a big home on it … something that he can put a high price tag on. Why? Because he paid a high price tag for the lot. He’s paying a high price tag for the labor, and he’s paying a high price tag for the materials.”

Bannigan said the regional difference in statistics depends on factors such as “where the jobs are or where you might like [to buy] a vacation home.”