The housing market in the U.S. isn’t doing much these days. Sales are falling, and prices have remained flat for some time. Many people have been priced out of the market. But one part of the market has been booming in recent months.
Homes priced over more than $2 million are hitting decade level highs. While the rest of the housing market remains sluggish, luxury home sales are taking off. Home sales over $10 million are on track to be twice levels reached during the heights of the housing bubble.
Many factors contributing to luxury home sales boom
It seems to be a perfect storm of sorts for high-end home sales. Interest rates remain low, the stock market is strong, and loads of foreign investors are supplying the market with a steady stream of buyers. In a record-breaking second quarter this year, the six-county Southland reported 1,436 homes worth over $2 million were sold according to CoreLogic DataQuick.
In the third quarter this year, 1431 were sold, which is up 14 percent from the same quarter in 2013. The housing market is moving at two speeds. The high end is faster than ever and the rest is slowly moving along.
The largest factor and biggest difference from the housing bubble years is the influx of wealthy international buyers. The world is getting smaller. You can shop for homes and even purchase them from a distance so easily now and America is a great place to have a home. Every market is a global market, it seems.
Banks are still wary of risks since the crash. They are more likely to loan money to a wealthy investor buying a second home than a first-time homeowner. Until things change, the market is likely to stay this way.
What does this mean for me?
If you’re marketing luxury homes in Southern California, this information could be a gamechanger. The world is getting smaller. To take advantage of this, cater to a global market. Think outside borders. Some agents are flying around the world to meet with potential investors.
Now, you may not be in a position to do that, but there are other ways to make your homes visible on the global market. The Internet is your best tool for this. Skype meetings are becoming commonplace. You can do a lot from your desk these days.
Get to know your demographic. Who is buying homes in your area. Where are they from? This 2014 Profile of International Home Buying Activity is a great place to start. With any change in the market, early adapters always have an advantage. Stay current to stay selling.