California Luxury Home Market Struggles

[Feb 9, 2009.]

 

Sales of luxury homes valued at $1 million and up in California plunged 42.5% over the last year, according to MDA DataQuick. Job losses, foreclosures, lack of credit for mortgages, and other economic woes have pummeled the entire housing market in the state. Although sales of lower priced properties are beginning to see a bit of life due to lower mortgage rates and foreclosure deals, luxury sales have slowed.

California had the highest number of foreclosures of all states in 2008, according to RealtyTrac. Foreclosure filings in the state jumped 110% from 2007 and nearly 412% from 2006. 

The Sacramento area was hard hit, with total luxury home sales down 50%. The Tahoe area had seven sales of homes above $5 million last year, compared with 23 in 2007, according to the Sacramento Bee. 

Most luxury home sales in the state were in the $1 million to $2 million range, but the most expensive purchase was for $38 million in Los Angeles. The county of Los Angeles accounted for half of all luxury home purchases in the state.

  

The luxury home market has been impacted by the inability of many buyers to obtain credit to take advantage of lower mortgage rates. "Anything for the upper-end market, there's no financing," Scott Johnson of Pipeline Capital Group, a mortgage broker in Granite Bay, Calif., told the Sacramento Bee. "You're effectively looking for a cash buyer."

Even celebrities are having a tough time selling their homes. Eddie Murphy originally listed his home at $10 million in 2005, but it ended up selling for $6.1 million.

While many wealthy people still have money to purchase homes, they are choosing to wait until the housing market improves to seriously consider buying. Also, some wealthy homeowners are unwilling to list their homes at bargain-basement prices and are sitting tight until the economy improves.

 

 

 

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.