Where the luxury real estate market is still strong despite the pandemic

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Most of the real estate sector has been hit hard by the coronavirus pandemic, but ultra-luxury rentals and sales in the U.S. have remained relatively strong despite the health crisis. Oren Alexander, luxury real estate broker at Douglas Elliman and co-founder of the Alexander Team, joins “Squawk Box” to discuss where the extremely high-end properties have done particularly well.

Home prices were not only gaining in February, the gains were increasing steadily. Nationally, prices were 4.2% higher annually for the month, up from a 3.9% gain in January, according to the S&P CoreLogic Case-Shiller Home Price Indices.

The 10-City Composite rose 2.9% annually in February, up from 2.6% in the previous month. The 20-City Composite increased 3.5%, up from 3.1%.

Prices in February were fueled by strong homebuyer demand, very tight supply and near record-low mortgage rates. While rates are still low, and supply is even lower, demand has fallen dramatically due to Covid-19 and the economic shutdown.

“Results for the month were broad-based, with gains in every city in our 20-City Composite; 17 of the 20 cities saw accelerating prices,” said Craig Lazarra, managing director and global head of index investment strategy at S&P Dow Jones Indices in a release.

Price gains continued to be strongest in Phoenix, Seattle, Tampa and Charlotte. In February, Phoenix home values were up 7.5% year over year, followed by Seattle with a 6.0% increase, and Tampa and Charlotte with 5.2% increases. Chicago, New York and Dallas saw the smallest annual price gains at 0.7%, 1.5% and 2.5% respectively.

Of course there is a caveat to all of this.

“Importantly, today’s report covers real estate transactions closed during the month of February, and shows no signs of any adverse effect from the governmental suppression of economic activity in response to the COVID-19 pandemic,” said Lazarra. “As much of the U.S. economy was shuttered in March, next month’s data may begin to reflect the impact of these policies on the housing market.”

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