High-end properties are increasingly coming under the sort of pressure once reserved for moderate homes. In fact, as slowing price declines fuel hope that the real estate bottom is near, other signs suggest the worst is on its way for the region's upscale market. ...
[T]he type of person who might have been looking to buy a more expensive house in the past today often doesn't have the necessary equity appreciation to consider a million-dollar home.
Tuesday, May 19, 2009
High-end housing getting hit
Calculated Risk quotes the San Francisco Chronicle:
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housing bubble
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Over the last few years I've watched builders constructing Mcmansions and wondered " Where are all the millionaires to buy this overpriced poorly made crap and I guess they are now seeing the answer.They don't exist.
ReplyDeleteIt sounds very similar to what is going on in DC. The article says that in the Bay Area (not sure how they define that), there is 14 months of inventory for homes listed at > $1million. That is the same number we have in DC as of April '09 (just the District).
ReplyDeleteI am thinking that the high end is getting hit by multiple factors. For one is the credit markets are tighter now (keep in mind that these are all jumbo loans, which have different rules and generally higher rates). For a while anyways, the jumbo market had completely frozen over.
ReplyDeleteSecondly many potential buyers haven't been doing all that well in the markets as they used to be, so they don't feel quite as flush as they used to, and borrowing against stocks doesn't seem like such a hot idea any more.
Finally, the potential buyers might have other properties that they would need to sell, and they might not make as much or anything from that sale. For that matter, anyone underwater on their primary residence is effectively sidelined until either the home gets foreclosed upon, or they manage to wait it out until prices recover.
To an extent the same problems apply to normal homes and normal people as well. The average person really only has at most one home.
One thing I am seeing is that the prices for vacation homes on the Delaware shore really haven't come down much, and the prices are still astronomical. If you move away from the water a bit, there are the dime-a-dozen condos and townhomes, and there are scattered foreclosures out there. But closer in, not much. Sellers so far don't feel pressured to sell and are holding firm on their prices.
Yet Baltimore high end sellers are holding stedfast. Prices still very near peak. What gives?
ReplyDeleteIs it really different here?
Nonpartisan - what part of B More? My guess is you are looking at the city or close in Bmore County areas? If so you could be seeing the same things we see here in DC (And arlington and alexandria).
ReplyDeletetowson and timonium prices aren't budging. Even the pathetic mcmansions out in belair and fallston remain ridiculously overpriced.
ReplyDeletenonpartisan, is it possible it just appears that way because there are a lot of houses on the market listed at 2006-era prices? That doesn't necessarily mean prices haven't come down if you look at sold prices, or that they won't if you look at months of inventory -- # on the market divided by # sold in a given month -- over 6 is considered high and generally precedes prices falling.
ReplyDeleteI think ANON412 is right -- lots of the posted prices are hold overs from the halcyon days of 2006. I've noticed Marco Island has dozens of homes listed in seven figures punctuated with foreclosures at much lower prices.
ReplyDeleteExcept for forced sales, owners aren't motivated to sell and keep holding onto to the dream. Wait another couple of years, the facade will crack. It eventually does.
potomac is already dropping. I was going to wait a year or two and buy in rockville or bethesda, but I have enough money to probably purchase in an upgraded area by that time at this rate! Im one happy SOB! Thanks to all the morons for biting off more than you can chew! Just walk away now so that I can purchase sooner!
ReplyDeleteHigh-end sellers are probable aware of the fact that selling now is not viable since they won´t get the kind of money they are probably looking for
ReplyDelete