Though only 2 percent of the overall housing market, high-end home volume sales have seen a dramatic drop, according to Molony. Homes valued at $750,000 or more plunged a whopping 47 percent in the year ended in November. By comparison, sales of homes valued at $400,000 or less fell by only 3 percent during the same period.
A look at the markets during the same time period shows the Dow Jones fell 33.1 percent, while the S&P shows a 37.5 percent drop in value.
Real estate professionals agree that sliding markets and a ravaged economy are hurting prospective high-end buyers and sellers. And that means prices will likely decline even more before there is any recovery.
"Unless they are forced to move, they are staying put," says Mary Cassidy, a licensed real estate broker in Bronxville, New York, a wealthy suburb of New York City that is home to many Wall Streeters. "People are not buying and people are not selling. When everyone’s uncertain as to whether they have a job, why go out and buy something?"
While equities and the economy are reasons for slower sales, the rise in jumbo loan rates is another, says Greg McBride, Senior Financial Analyst at Bankrate.com. "More money down is the big reason people aren't taking them out," McBride says. "It takes good credit but you need 30 percent down or more and even those people are paying an interest rate of more than 7 percent."
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Bob Walters, Chief Economist at Quicken Loans also sees fewer jumbo loans being made. "Down payments have to be higher, credit scores have to be higher," says Walters. People are getting hit hard from all sides and there's less demand for more expensive homes."
By nature, jumbo loans, or non-conforming loans are used for financing high end homes. They are a mortgage with a loan amount above the industry-standard definition of conventional conforming loan. A loan in excess of $417,000 to $625,000 is currently considered a jumbo in most states. And jumbos have interest rates a little higher than a conforming loan.