Here’s how much your house has to be worth to be considered a ‘luxury home’

Are you living a life of “luxury”? The answer might surprise you.

The average threshold value for a luxury home in the United States was $1.3 million in 2025, according to a new study from real estate firm Sotheby’s International Realty. But as expected, this threshold varies wildly depending on the part of the country.

The luxury home price threshold is up more than $300,000 over the last decade, highlighting how at least this part of the housing market is withstanding economic pressures.

“The general real estate market was more impacted by elevated interest rates and affordability issues such as higher prices,” Sotheby’s CEO Philip A. White said in a statement.

“[B]ut the luxury real estate market is positioned for continued outperformance, building on 2025’s robust foundation, which included areas seeing increased inventory, growing international homebuyer activity and a larger percentage of all-cash sales, particularly at the higher end.”

The Sotheby’s report examined trends in the luxury real estate market over the past 12 months and provided projections for where the market is going in 2026.

The entry-level price for a luxury property is based on pricing data for the top 10 percent of home values in a given area, the report noted.

In Los Angeles, for example, luxury homes start at $3.9 million - triple the national average. In New York City, that figure was $2.8 million in 2025.

But luxury homes aren’t the final rung - high-end luxury properties, which are the top 5 percent of house prices in the U.S., started at $2 million in 2025. The top tier - ultra luxury - which accounts for the top 1 percent of home prices, was $5.4 million in 2025.

The report also looked at some drivers behind the boom in the luxury end of the market, including the “Great Wealth Transfer” happening in America, where Boomers are projected to pass down $100 trillion to younger generations through 2048. Globally, an estimated $6 trillion was passed down in wealthy nations in 2025, Sotheby’s said.

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Luxury home inventory levels have risen to where they were a few years ago, a good sign for luxury buyers, Sotheby’s International Realty Chief Marketing Officer Bradley Nelson said in a statement.

“As we look ahead to 2026, inventory levels have largely returned to pre-pandemic norms,” Nelson said. “This renewed balance in the market signals healthier conditions and provides buyers with a wider range of opportunities.”