Stats are finally supporting what we Realtors have been experiencing in the field -- the current housing crunch is affecting the luxury housing market.
Tougher mortgage/loan requirements and higher interest rates for jumbo loans than for conforming loans caused sales of luxury properties to slow starting in the fourth quarter of last year and the trend has continued into 2009. As a result, the national inventory level of homes priced above $750,000 rose from 18 months worth in 2007 to 41 months worth by this past summer. The National Association of Realtors also reported that as of October 2008, the foreclosure rate on jumbo loans was more than double the foreclosure rate on conforming loans. As a result, we should expect to see growing numbers of luxury homeowners in default.
This trend presents an even greater challenge to those of us who include some higher end real estate in our niche because the luxury market buyer pool is significantly smaller while the seller pool may require a different type of support and guidance to help them understand the restrictions associated with having to sell a home short.