Below is a post from Sam Chapman, a fellow Realtor in Austin, Texas.
Sales of high-end homes have been hurting in the Austin area and I suspect it is the same just about everywhere. The tightening of lending standards cut a lot of high end buyers out of the market just like it did for low end buyers with little to put down.
What went away were loan program that didn’t require putting much money down, no documentation loans and stated income loans. So if someone wants to sell a home on Lake Travis, for example, he needs to understand that the number of buyers is way down from 12-18 months ago.
Another thing that cut many people out of the market for a high-end home was the plunge the stock market experienced. Many people have had do make downward adjustment to their price range because they don’t have as much to put down on a home purchase.
What this has lead to in the south Lake Travis area is a decrease in prices, especially in the $750,000 and up price range. Many builders have made some very large price cuts to get new homes sold and that has put pressure on the resale market to see price drops. Although prices in the Austin area are down just around 5% from last year, prices in the south Lake Travis area were down over 11% last month compared to a year earlier.
When will we and other areas see a recovery? In my opinion, not until we get rid of a lot of existing inventory. We’re seeing movement of homes in other markets that may have hit bottom, but at low prices, and many have been foreclosures. It is simple economics. When the inventory gets low enough and people want to buy, prices will stabilize. Unless we see inflation and we see the cost of building materials rise significantly, I don’t think we will see a significant price increase in most markets for a few years. In some markets, it may be a lot longer than that.
So if you’re in the market for a higher end home, whether it be a home in Austin or Sarasota or some other city, you may be able to find some deals out there if you have money for a down payment and the ability to qualify for a mortgage.
Guest post by Austin real estate agent, Sam Chapman
High end homes are slow here in AZ as well.
Good luck!