The wealthy are splurging on million-dollar homes again, as sales of homes priced at $1 million or more climb while lower-priced properties continue to lag.
Homes that sold for $1 million or more rose by 8 percent this year, while homes at every other price point dropped by 4 percent, according to National Association of REALTORS® research.
High-end Habitats
Million-dollar homes climbed out of the Great Recession much faster than those at other price points.
“The share of homes selling for at least $1 million fell when the 2008 financial crisis hit, but it recovered faster than the rest of the market during the past two years,” The Washington Postreports. Sales in the $1 million–plus range are now approaching levels comparable to the housing boom peak in 2007, according to CoreLogic research.
Sales at the higher end are often clustered in a few areas across the country, such as the Washington region and other high-priced coastal spots. Housing analysts say one of the reasons for the surge in luxury sales is that “jumbo” mortgages that are being offered at the same — or even better — interest rates as conventional loans. Lenders have been chasing after the affluent by offering favorable terms and interest rates with jumbo loans – loans that exceed $417,000 in most parts of the country or exceed $625,000 in other high-priced markets. Indeed, the dollar volume of jumbo lending has grown to 20 percent of all home purchase loans, the highest level since 2002, according to Inside Mortgage Finance.
“Many people are finding out by accident that they can often get a better rate on a $700,000 mortgage than a $400,000 mortgage,” Guy Cecala, publisher of Inside Mortgage Finance, told The Washington Post. “The opportunities for wealthier borrowers are now better than they’ve been in a decade as far as rates and terms.”
Source: “Rich People Are Splurging on Million-Dollar Homes Again. Here’s Why,” The Washington Post (Nov. 7, 2014)
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