A few weeks ago an article was published by Newsweek regarding how the luxury market typically doesn’t follow the same housing trends as everything else. This is no news to those of us that specialize in high-end homes. The luxury market, as historical statistics show, is regarded as “recession proof”.
Will the current fizz seen in our local Minneapolis-St. Paul market hit luxury homes? Well, if you read my monthly market statistics regarding Lake Minnetonka real estate, then you should know that homes priced between $1-2 Million sell like hotcakes. It is only when you reach $3 Million and above that the selection of homes for sale thin out, and thus the number of buyers who can afford that price bracket. It will take all of 2008 to see how the luxury home market handles the decline, and I will keep you updated as the months go by.
In the meantime, enjoy the following article.
What Housing Crisis?
Why the mortgage mess hasn’t hit the luxury market, yet
By David Koeppel Newsweek Web Exclusive
There isn’t much positive news in the housing sector. Largely as a result of the subprime mortgage mess, the number of homes that slipped into foreclosure proceedings in 2007 jumped 70 percent from the previous year, according to RealtyTrac. The National Association of Home Builders this week announced that new-home sales dropped 29 percent in 2007, the industry’s biggest drop in four decades. In addition to those troubling stats, there are the ever-increasing costs of energy and recession worries to be concerned with.
So why are ultrahigh-end home prices still rising, with some prices reaching up to an astronomical $175 million? It’s a simple matter of supply and demand, say brokers from hot markets like Manhattan, the Hamptons, Palm Beach and both ends of California. While there’s a national glut of McMansions in the $500,000 and up range, there’s a shortage of trophy properties on the market and an increasing number of wealthy foreign buyers from Asia and Europe looking to capitalize on the weak U.S. dollar.
