Luxury Home Market Weak In CA
A report out of Long Beach, CA, says luxury homes are taking longer to sell. "Properties across the board are sitting on the market longer thanks to a rise in the number of homes for sale. The state's housing inventory is double the level of last year, according to the California Association of Realtors."
"Sales of homes for $1 million and up rose from 19,100 in 2003 to 33,100 in 2004."
"'I think it's a psychological threshold as well as a threshold for financial obligation,' said Robert Kleinhenz, an economist with the CAR. In talking with realtors, more people are backing out of the luxury market, or looking at more affordable options inland, he said."
"Even at the high end of the market people are shopping for the best deal, said Richard Daskam, with Keller Williams Realty in Long Beach."
6 Comments:
I live in a super expensive market (Monterey/Carmel). The market does seem to be softening. A house on my drive to work was listed at $2.4 million 3 months ago then reduced to $2.2 million last month.
Last weekend we casually visited 3 open houses.
One 3br had ocean views from each floor and cost $1.3 million. "Selling for much less per square foot than other recent listings."
One had 4br and no ocean view for $1.4 million.
Finally, a very average 3br with cheap construction, no view, small yard and 50% less sq. ft. than the other two was listed at $850,000.
The $1 million plus houses were vastly better deals than the cheaper one. Of course all of these houses have doubled in asking price since 2003.
-Generic
Actually, just because there are more $1,000,000+ homes on the market doesn't mean that the wealthy are trying to unload their properties because they think the market has topped. A $1,000,000 home is really not a "Luxury" home, it is a simple home that due to the recent appreciation spike is now in the $1,000,000 range.
Perhaps that should redefine "Luxury" homes to be those above $2,000,000.
10:23 Anon
I agree.
there is a house on sale in artesia (suburb if la) 5 BR/4 Bath, 2700 sqft, little bigger home than average, but surrounded by major road on one side, lots of very very old holes on others.
THis home is going for 985K. This was built in 2003 and was sold around 500K at that time.
I cant believe this suburb is going to be called million dollar neighbourhood or city.
1,000,000 is more than a psychological barrier. It's also the maximum amount of debt that qualifies for primary mortgage deduction.
11:14 anon,
Wow, I didn't know that, thanks.
Good point about the mortgage deduction limit. This plays a big role I think in capping home prices because the numbers just don't add up.
In my area in NorCal, the high end homes ($2-4M) haven't appreciated much at all since 2000. Kind of interesting. The home I rent is worth about 2.2M. It was supposedly worth about $2M in 2001. So very little appreciation for the past 4 years. Yet the homes that were on offer for $750K in 2001 are now selling for 1.2-1.3M---nearly a double.
Maybe we'll have a market where every home is selling for $1M---no matter how crappy---except for those selling for $2M and up.
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