California's Luxury Housing Market Booming - If the economy is still in jeopardy in California, you wouldn’t know it to look at the luxury housing market. Last year, the sales of homes worth $5 million or more actually hit an all-time high! Homes priced over $1 million experienced the highest number of sales since 2007. In fact, one California home sold for more than $117 million – the highest-selling price of any U.S. home ever!
And you thought we were trying to recover a recession! So, what gives? Well, there are actually 3 reasons for the boom in California’s luxury housing market:
1. Location, Location, Location
Even when the housing market is down, homes in prime areas are still going to sell more often – and for higher prices than in other areas of the United States. Most of the luxury sales in California are happening in the high-priced luxury markets in Silicon Valley as well as Southern California, a location well-known throughout the world for its beaches and sunshine. The techies in Palo Alto, the beauty and uniqueness of San Francisco, and the beaches and celebrities in Los Angeles all attract a higher-caliber clientele, which contributes to the boom in the luxury housing market. Furthermore, with the technological job market increasing, many people are relocating to California to either work or to start companies. Since the areas best-suited for this endeavor are so expensive to live in the first place, people don’t have much a choice other than a million-dollar home.
2. “Affordable” Prices
For most Americans, a million-dollar home probably doesn’t seem like that great of a deal. However, the prices of luxury homes have come down dramatically in recent years. In fact, the prices are so low that many properties are selling for higher than the asking price due to the bidding wars of some investors. But even after the bidding wars, investors are finding that prices are low enough that there is a good chance of a high return on their investment encouraging buyers more than ever since the housing market crashed.
3. Foreign Buyers
Nearly 25% of the luxury buyers here are coming from overseas, and many of them are paying in cash. Apparently, it all goes back to the affordable prices that we just talked about. The prices here in the U.S. are being seen as a bargain all over the world, so buyers are happy to come to California – where they can get more bang for their buck! Realtors around California report seeing an increase in foreign buyers from all continents, but with particularly heavy purchasing out of Asia, Russia, Italy, and Germany. Some buyers find that they can purchase better homes for the price than in their home country and move here to live – while others are using these prices as an investment opportunity. Although in many parts of the country a million dollars will easily buy a mansion, in Southern California and San Francisco, you may be lucky to get a decent condo. Even so, foreign buyers are seeing the value in these homes and find that they can get better quality in better areas and wealthy foreigners are buying and investing in California significantly contributing to this boom.
Investors and buyers are hoping to see the value in these homes steadily go up and eventually be able to make a large profit. At any rate, this luxury housing boom is hopefully a sign of more positive things to come for the entire U.S. housing market!
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