So the stock market is crashing to the worst week ever (I think due to off books Enron style account, see 07 warning).
So how will that affect the housing market for luxury homes?
Don't care? Then don't read this.
I had a theory- albeit obvious - that those buying Virginia luxury homes over $1 Million in Arlington and the DC area would come to a halt since these buyers most likely "had" their money in stocks.
Who is going to unload their stocks down 25-45% to buy a house? With a 20-25% down payment (5%-10% down is much harder, if not impossible, now) that can make that $2 million property feel like $2.2M overnight, and without another wing on the home.
My data-pull results (not regurgitated data):
I pulled up homes in the DC area from $1 Million to $4 Million that went under contract (more reliable than solds) for a 4 day period and compared it to the one and two weeks before.
- 9/21/2008-9/24/2008 26 under contract
- 9/28/2008-10/1/2008 25 under contract
- 10/5/2008-10/8/2008 13 under contract
For homes from $800,000 to $1,000,000:
- 9/21/2008-9/24/2008 24 under contract
- 9/28/2008-10/1/2008 25 under contract
- 10/5/2008-10/8/2008 12 under contract
That doesn't look good, to say the least. Will this become a longer term trend in the higher end luxury market? Dunno.
What if you are high end buyer?
Know the stats, know that 50% of your competition just flew the coop. This allows you to be more aggressive. As for waiting, that is obviously your call, I don't believe in market timing. Heck it could get MUCH worse, or things might stabilize and the buyers might come back.
What if you are a high end seller?
Read above, but know that it isn't your agent slacking off. Also if you do get an offer... man, you have to have some serious cohones to try and get much better. Sure next week might look better, but you really never know.
If you have any specific questions about a marketplace or price bracket, let me know and I can run some specific numbers.
If you know somebody looking at high end homes, forward them this email and make sure they subscribe to Blog.FranklyRealty.com .
-Written by Frank Borges LL0SA Broker FranklyRealty.com
Image is a photo of a $3.3M property sold previously by FranklyRealty.com
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