If you chose the luxury market, congratulations – You are right on the money. The overall housing market is doing fine as well. In August, there were 4,386 single-family homes sold and closed in the metro area, a 17.59 percent increase from the 3,730 sold in August 2012. Not bad considering that interest rates have risen from their all-time lows by more than a full percentage point, although they remain low by historical measures.But the percentage gains for the sale of luxury homes, those priced at $1 million or more, rose by 28.6 percent in August from August 2012, according to an analysis by Kentwood Real Estate. That is a full 10 percentage points higher than the overall market! The dollar volume for seven-figure homes grew even more. The dollar volume rose by 30.9 percent for luxury homes to just under $93 million in August, compared with $71 million a year earlier. Granted, the luxury housing market is a small part of the overall market. The dollar volume accounts for about 6.1 percent of all of the single-family homes sold.

So why should the 94 percent who can’t afford to buy a million dollar home care that the upper-end of the market is booming? First, luxury home buyers tend to represent the so-called “smart money.” Often, these are the people who see value when others do not, whether they are snapping up stocks, commercial real estate, or houses. Bargain hunting among the well-off was certainly a driving force earlier in the year. In many hot, high-end neighborhoods, however, the demand far outstrips the supply, driving up prices.

Yet, the luxury housing rally has continued, even as the prices of high-end houses have risen. Year-to-date, well-heeled buyers paid $731.4 million for luxury homes, a 41.7 percent jump from $516 million in the first eight months of 2012, according to Kentwood.

Finally, when someone spends a million or more on a dream home, it is a safe bet the spending doesn’t stop with the mortgage payment. After they sign on the dotted line, buyers will continue to open their check books to truly make the home theirs, often gutting the home and filling it with new furniture and appliances. And you know they are not shopping at thrift stores. That kind of spending is good for the economy and helps creates jobs for those who can’t write a seven-figure check.

In other words, you may not be able to afford your 7-figure dream home, but it is a good thing that people who can are taking the plunge.