by Steve Harney on June 4, 2010
There is no longer any question that luxury homes are beginning to sell. The high-net-worth client has marked 2010 as the year to again start purchasing real estate and their desire is turning into sales. Financing is beginning to open up in the ‘jumbo’ market and prices are starting to reflect true values as upper end foreclosures are starting to mount. What does this market have in store for us as we move forward in 2010? That will be determined by supply and demand.
Obviously, demand is increasing. The Wall street Journal reported:
“After a near-disastrous 2009, the luxury market appears to be making a comeback, driven by growing buyer confidence, improved financing conditions and more-realistic seller pricing. Despite the housing downturn, attractively priced homes in some of the nation’s most coveted neighborhoods are selling, sometimes fast and sometimes with multiple offers. Nationwide, sales of homes selling for $2 million to $5 million in the first quarter totaled 2,461, up 32% from a year before, says CoreLogic.”
Here is a graph from the Wall Street Journal article:
We can see that sales have not reached the levels they ballooned to from 2004 – 2008 (and probably never will) but have attained the level of sales of the more normalized market prior to the housing bubble.
This consumer will not be impacted by the tax credit. There is no reason to believe that demand will wane as we move throughout the year.
There is already a huge supply of homes in this category on the market. That supply will increase as more and more luxury homes find their way through the foreclosure process. The numbers of upper end homes going into foreclosure is surging.
We can look at the following graph to see that, even at the higher ends, people are not keeping current on their mortgage obligations.
These homes will create an ongoing stream of discounted properties in upper end communities.
What does this mean to you?
This market is showing signs of life. The volatility is concerning. If you are either a buyer or seller at these price points, get great counsel from a real estate professional experienced in the luxury market.
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News Alert! The Luxury Market Has Returned