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Crewleader

(17,005 posts)
Thu Sep 11, 2014, 11:49 PM Sep 2014

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 they’re 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 – they’re 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 aren’t that many people around with the means to buy these properties, and sellers usually aren’t that desperate and don’t 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/
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Wealth Effect’ Kicks in: Luxury Homes Are Hot, Rest of Housing Market Gets Hosed (Original Post) Crewleader Sep 2014 OP
This is not terribly new. SheilaT Sep 2014 #1
 

SheilaT

(23,156 posts)
1. This is not terribly new.
Fri Sep 12, 2014, 01:47 AM
Sep 2014

In the past, during economic downturns, luxury items have tended to stay strong. Yachts. High end jewelry. Only rarely do high end homes come down in price.

During the Great Depression, mansions in Newport RI went for pennies on the dollar. Not that very many people had enough pennies to buy those homes. Right now it's big news that the Fisher home in Palmer Woods (a formerly very exclusive suburb of Detroit) sold for $1.6 million, by far the largest home price in Detroit in several years. It's a place that will easily be worth several multiples of that price in a few years as Detroit recovers from its economic downturn.

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