Wealth Effect’ Kicks in: Luxury Homes Are Hot, Rest of Housing Market Gets Hosed
Wealth Effect Kicks in: Luxury Homes Are Hot, Rest of Housing Market Gets Hosed
by Wolf Richter September 11, 2014
Home sales have been declining since last fall and in some cases steeply, with memories of bidding wars early last year triggering wistful sighs. The sales decline continued into the summer, and indications are that theyre dragging into September as well. But the median sale price continued to rise, if at a slower rate, and in many areas has moved out of reach for the median-income household.
Unsold inventories are rising. This has hit new homes the hardest. Otherwise exuberant homebuilders theyre licking their chops about the sky-high asking prices are complaining about foot traffic just as inventories have reached 6 months supply [Drowning in Unsold New Homes?].
Home sellers have gotten nervous, and 24% of them across the country lowered their listing prices in July to entice potential buyers to show up. And home flippers are finding their business model buy low and sell high under pressure [Home-Flipping Collapses in San Francisco, Losses Spread ].
But hey no worries at the upper end. In the luxury housing market, it has always been a long drawn-out process to sell a home. There arent that many people around with the means to buy these properties, and sellers usually arent that desperate and dont have to sell and thus can hang on to their homes for years. In that rarefied air, the housing market is booming, and the time it takes for a luxury home to sell is dropping.
http://wolfstreet.com/2014/09/11/luxury-homes-goosed-by-stock-prices-rest-of-housing-market-teeters/