Luxury Homes Losing Value
Thanks to a slightly bizarre story about a New Jersey couple putting their almost-finished home on the market for $68 million, I decided to take a look at the luxury home market today.
Hey, it's Friday.
It's hard to get data exclusive to this segment of the market, since the $1 million+ homes make up just 1 percent of all existing home sales.
The National Association of Realtorsbreaks out sales by price and does show that sales of $1 million+ homes are up 54.4% in April from a year ago.
In searching for more data, my colleague Nick Dunn, CNBC's Deputy Managing Editor, pointed me to The Institute for Luxury Home Marketing, which operates out of Dallas. They run data weekly on high-end homes in 31 local metro markets. They do that by ranking zip codes by median price and then taking the data from the top ten zip codes with median prices above $500,000. That's how they arrive at their composites.
Of course the first thing I look for is prices, and that's their top chart.
It seems that while the middle and lower end of the market was seeing real price recovery this Spring, the high end, which was pretty flat all fall, started to really tank from March through May.
Not surprisingly, the inventory of high end homes surged in January, just before that price drop and is continuing to climb.
I suppose some sellers were feeling better about the economy and the market and thought this was the time to get back in.
Unfortunately they were sorely mistaken.
The percentage of sellers who dropped their asking price at least once over the past 90 day period went from 33 percent in mid February to 38 percent at the end of May.
Obviously the high end of the market was not at all moved by the home buyer tax credit, since $6500 to a move-up buyer isn't going to mean much on a multi-million dollar home.
First-time buyers in high end?
Maybe Justin Bieber.
I wish the folks in New Jersey good luck.
I think we're going to put their house on TV at 4:50p today, so watch for it.
Questions? Comments? RealtyCheck@cnbc.com