Seeking Real Estate Bargains? Try Looking at the High End
Mainstream Home Prices May Be Rising, But Luxury Properties Still Offer Deep Discounts
By BRETT ARENDS
Falling real estate prices are becoming as much a feature of high-end neighborhoods as ocean views, infinity pools and four-car garages.
While the latest data suggests prices for mainstream homes may be stabilizing after several years of pain, the news for luxury homes isn’t looking as good.
That’s bad news for sellers, naturally, but anyone in the market for a home listed for $2 million or more will find deeply discounted asking prices—and may be able to command even lower prices.
On Tuesday, data from the Federal Housing Finance Agency showed that average home prices ticked up 0.3% nationwide between June and July, including a 1.6% bounce on the west coast. The gains are modest, and they are partly influenced by the season—higher-end homes tend to sell better in late spring and early summer, as families try to move before the school year. Analysts are disappointed the rise was not higher.
Nonetheless, prices have now risen three months in a row. And compared with the disastrous events of the past few years, anything other than Armageddon is apt to raise spirits.
But these numbers only relate to homes purchased with conforming loans backed by the FHFA—in most areas, that describes mortgages of up to $417,000, or up to $713,000 in the country’s most expensive regions.
A stone patio surrounds the pool outside a spec home at 38 French Road in Greenwich, Conn. The city is seeing the worst home-sales market—and deepest discounts—in decades.
That overlooks luxury and high-end homes, where the outlook remains bleak.
“I would say we’re 40% off 2007 prices for everything,” says broker Chad Rogers, who covers the area from Malibu to Hollywood Hills for Hilton & Hyland, a Beverly Hills real-estate firm. “We’re now seeing prices consistent with where we were back in 2003.”
“The $10 million to $30 million properties are on the market for a very long time,” says Cathy Wood, a real estate broker covering Beverly Hills and surrounding areas for realty firm Gibson International. “They’re seeing a lot of price reductions.”
Realtors, she says, “are now selling $500,000 condos, when they used to sell $5 million homes.”
Read the rest of the article here
Scott Gibson, President and CEO of Gibson International, reflects on the article, “I would agree with the article that prices in the upper end have come down considerably and are still dropping to some degree. We believe that prices in LA took the biggest drops during the period of October 2008 to April 2009 when the financial meltdown was creating fear and panic even in the wealthy. Now that things have calmed down and there appears to be some certainty that we are not going into a depression but rather now moving out of a recession, firming of prices and increased buyer activity is starting to occur.”
Source: Wall Street Journal Online
