Spending more than a million dollars on a home might not seem like much for those in California, but it is. It turns out luxury home prices are rising much faster than those of non-luxury homes, which are at a record high, too, but only rose 4.6% in the first quarter to $345,000. (The analysis considers luxury homes as those in the top 5% of their respective metropolitan area in terms of value.)

The three most expensive home sales across the country occurred in Miami, Seattle, and Los Angeles, for $48 million, $38.9 million, and $38.5 million, respectively, in the first quarter. 

Apparently demand for opulent homes is still very prevalent, but part of that is because those who can afford luxury homes are undeterred by high mortgage rates—either because they pay in cash, or can afford it either way. The number of luxury homes bought in all-cash is at an all-time high, according to Redfin: Nearly half of luxury homes purchased during the three months ended Feb. 29 were purchased in cash (the highest in at least a decade). Even so, demand for such homes has “held up better than demand for middle-of-the-road homes,” Redfin’s data journalist Dana Anderson wrote in an analysis published Friday.

And more demand has translated to more sales. Sales of lavish homes rose 2.1% in the first quarter compared with a year earlier. But sales of non-luxury, or typical, homes fell 4.2% over the same period. 

“People with the means to buy high-end homes are jumping in now because they feel confident prices will continue to rise,” David Palmer, a Seattle-based Redfin agent, said in the analysis. “They’re ready to buy with more optimism and less apprehension.”

Palmer added, “It’s a similar sentiment on the selling side: Prices continue to increase for high-end homes, so homeowners feel it’s a good time to cash in on their equity. Even though mortgage rates remain elevated and demand isn’t as high as it was during the pandemic, many homebuyers and sellers feel the worst of the housing downturn is behind us.”

Interestingly enough, luxury-home sales only began rising in January for the first time since August 2021, but non-luxury home sales haven’t risen since the end of that same year. All existing home sales fell last year to their lowest point in 28 years. And after what felt like the beginning of a recovery, existing home sales fell again in March on a monthly and annual basis—but home prices rose. 

So what’s happening in the luxury market isn’t too far off from the broader housing world, even if it is doing better than the so-called normal home market. But it might be doing better than you’d expect. 

In March last year, Redfin published an analysis that found luxury-home sales declined almost 45% in the three months ended Jan. 31. It was greater than the drop in sales for non-luxury homes, which had fallen more than 37% in the same period. At the time, Redfin listed several reasons for its fall: People were tending to purchase fewer expensive things during a period of economic uncertainty; luxury-home sales rose faster during the pandemic housing boom so they had more room to fall; and the wealthy were losing money in the stock market and were generally worried about real estate. 

Maybe the latest news signals a change in the mindset of the wealthy. Or it could be as simple as there being more luxury homes on the market.

“The total number of luxury homes for sale rose 12.6% from a year earlier in the first quarter, the biggest increase on record,” Anderson wrote, adding: “New listings of luxury homes soared 18.5% from a year earlier in the first quarter, the second consecutive quarter of double-digit increases.” Part of this has to do with the “lock-in effect,” which refers to homeowners refusing to sell for fear of losing their low mortgage rate. It has less of an impact on luxury homeowners, either because they can take on a new, higher mortgage rate or buy their home in cash (as opposed to less-wealthy people). Both figures are substantially greater than those of non-luxury homes, but are still lower than pre-pandemic levels—and that’s part of the reason we’re seeing prices go up.