According to the Wall Street Journal, (Seeking Real Estate Bargains? Try Looking at the High End, Sept.23, 2009), luxury home buyers are continuing to see the prices of homes come down.
The Virginia Association of Realtor's Trends in the Virginia Housing Market, 2nd Quarter 2009 Report shows that unemployment in Fairfax County is down at 4.3%. A low unemployment rate, a government funded program of first time buyer incentives, great deals in the foreclosure/ short-sale markets, and low interest rates have all resulted in a 2nd quarter (the most recent information available) increase in both sales volume and median prices in Fairfax County.
Does that mean we have hit the bottom and are on the way up? I think it depends on the market segment. In the lower end, those homes that are considered 'starter' homes, sales are brisk and it is becoming harder and harder to find a 'deal.' For many, that would indicate that we have left the bottom of the real estate market crash.
For buyers and sellers in the luxury market, it may be too early to see the same upturn. There is a 'trickle up' aspect to prices in the Luxury Home Market. How often does a first time buyer purchase a $1 million home? It happens, but the conversation usually involves a house purchase, as well as trust funds and Lear jets. Most first time buyers are firmly in the lower half of the price spectrum.
Another reason the luxury segment has not rebounded as quickly could be the result of another government program; the temporary increase in the Jumbo Conforming Loan limit. It used to be that a lower Jumbo Conforming Loan limit almost demanded that a home over $750,000 would require both a first and second trust. Between the new higher limit of $729,500 and the reluctance of banks to make 2nd Trust loans, many high end buyers are buying homes that allow them to combine their cash-on-hand with the Jumbo Conforming limit of $729,500 to determine their offer price. I wrote about my take on this back in June, (Are New Higher Jumbo Conforming Loans Driving Down Prices?).
The stock market has also significantly impacted the luxury market. Many investors have lost too much money to take principal out right now and are waiting to re-gain some of their profits. They may be hestiant to put too much cash into a market segment, real estate, that has recently seen such significant loses. Fianlly, losses in the stock market may have left them feeling less wealthy and not as interested in lifestyle improvements.
As a Luxury Home buyer, however, all of this may be coming together to create the 'perfect storm' of a continuing buyers market in the luxury segment. If you have a mid-priced home to sell, the buyers seem to have come back. Selling your home quickly and for a fair price could allow you to get a great deal as you move up in to the luxury market.
Please let me know if I can provide you with information about luxury homes available in the Northern Virginia area.
If you like what you've read, please consider subscribing to my blog by clicking on the Orange RSS button and following the instructions. Thanks!
A GREAT Real Estate experience.
If I can help you, your friends or family buy or sell their next home in Northern Virginia, please let me know!
If you need help with a home outside of Northern Virginia, I have an extensive network of referral agents and will make sure you are working with the best!
The contents of this blog may not be copied or reproduced without the permission of Holly Weatherwax.