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Price Declines Abound In The High-End Luxury Home Market

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By : Gloria Singer    99 or more times read
Although certain expert sources state that the high-end luxury home market is beginning to rebound, most others agree that is not the case. In fact, it is generally accepted that the market for high-end luxury homes is less certain than it has been for nearly a decade. Luxury home buyers are well seasoned. They pay attention not only to the real estate markets, but to the various factors that affect the economy in general. They know when to keep their wallets in their pockets - and right now, they are waiting.

The Corcoran Group reported that median prices for resale co-op condos fell by 6% in this year's second quarter. The median price for resales on luxury condominiums declined by 22% and high-end new developments in the luxury home market fell a whopping 27% in median price.

Factors that acted in conjunction during 2008 to cause this current staggering pricing decline included:

  • Increasingly high losses of jobs;
  • Outrageous energy costs, including $4 a gallon gasoline;
  • Record high numbers of home foreclosures;
  • The pending presidential election;
  • A near total collapse of the financial industry in the United States;
  • Ever increasing bankruptcy filings. Currently, there is a bankruptcy filed in this country every 30 seconds on average;

And now, in 2009, factors that continue to keep the high-end luxury home market in a profitless state of stagnation include:

  • The continued ill health of various financial markets;
  • Very unattractive interest rates;
  • A severe lacking of available credit;
  • Diminished relative values of currency;
  • Impotent stock market conditions;
  • And a variety of other unpredictable factors as well…

It appears that the only good news is the historical trends associated with real estate markets in general. While high-end luxury home developments have been traditionally shown to be the final segment to slow in growth, it is also the first segment that bounces back. The critical factor that will determine the recovery of the high-end luxury home market is consumer credit availability. If lending institutions are not lending, people will not be buying.

According to the National Association of Realtors, sales are beginning to show signs of improvement. However, median prices are down significantly across the country and experienced buyers continue to wait for an economic rebound. The bottom line is that, until median prices show appreciable increments for a given period of time, those in position to buy high-end luxury real estate will not be doing so.
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