Thursday, January 31, 2013

Luxury Market Update: Sales of Million-Dollar-Plus Properties Hit 5-year High

LUXURY REAL ESTATE MARKET UPDATE: As reported in the Los Angeles Times, the number of California homes that sold for more than $5 million reached an all-time high last year, while those selling at a million dollars or more rose to the highest level since 2007. The luxury real estate market is coming back strong.

Cash buyers, an upturn in home prices and the recovering economy played a role in the increase, as did a year-end rush among the wealthy to take advantage of lower capital gains taxes by closing before year end.

Across California, 697 homes sold for more than $5 million compared to the previous high of 491 in 2011.

The 26,993 homes sold at $1-million-plus represented a 26.9% jump from 2011, according to San Diego-based DataQuick. In comparison, 42,502 home sales exceeded the million-dollar mark in 2007, before the mortgage meltdown dragged down home prices across the housing market.

"It should go without saying that buyers and sellers in the prestige market tend to respond to different motivations and incentives than the rest of the market," John Walsh, DataQuick president, said in a press release. "Job security, down payment sizes and mortgage interest rates don't play the same role. Returns on investments in a low interest-rate financial environment and safe-haven investing do play a role."

Cash buyers accounted for a record 7,791 of the million-dollar home sales, up from 5,802 in 2011.