Buyers looking to take advantage of record-low interest rates have been on the move recently, boosting home sale numbers in markets across the country. Median sale prices are up, and inventory is down, meaning buyers are often in bidding wars to purchase a home they want to own. What may surprise you, though, is that it's not just the cheaper homes that are selling. In fact, high-end homes are selling like hot cakes! Well, comparatively speaking, anyways.
According to the Wall Street Journal, sales of homes priced between $750,000 and $1 million rose 53% in October, when compared to the same month one year ago. And, the same report shows that sales of homes with a price tag over $1 million were up 28% in a year-to-year comparison between September 2011 and 2012. Some cities, like Palm Springs, California – where there are a multitude of homes in this price range – have a significant increase of home sales in recent months. In fact, the chief executive for the Palm Springs Regional Association of Realtors says sales of homes valued at $1 million or more is up 25% from last year.
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In all, the Association reports that a grand total of 328 of these high-dollar homes have sold through the first 11 months of 2012, compared to only 261 through the first 11 months of 2011. And, these high-end homes aren't on the market long either! In Palm Springs, homes that are priced at $1 million or more were on the market an average of 116 days so far this year. That's down from 175 days last year.
Statewide in California, it's much of the same. According to the real estate information service DataQuick, more than 7,700 homes priced at $1 million or more sold during the second quarter of this year. That's the second-highest sales number for one quarter, ranking only behind the third quarter 2007 during the middle of the housing market's peak.
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So, why are more high-end homes selling these days?
Well, there are two likely reasons. First, interest rates on home loans are lower than they've ever been. On November 21st, mortgage buyer Freddie Mac reported that the interest rate for a 30-year, conventional, fixed-rate mortgage had dipped to 3.31%. That's the lowest percentage since records were kept starting in 1971. Over the last few weeks, that rate has increased (but only slightly). Today, it’s still hovering near the 3.35% range. Secondly, it seems that the sellers of high-priced homes have been willing to accept less than they originally wanted for their properties. According to RealtyTrac, the average sale price nationwide for top-tier real estate fell to $2.1 million in the first half of this year. That's a 12% decrease from the same period in 2011, and is 17% less than the same time period in 2010.
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So, what does all this mean?
Plain and simple, it's the perfect storm for a buyer who can afford to purchase a high-end home! Higher-income consumers can qualify for larger mortgages with the extremely low mortgage rates. And these same prospective buyers are finding that sellers are more willing to negotiate on the price of their home than they have been in the past. But it's not completely a buyer's market!
Many of these top-tier homes are attracting a lot of attention from multiple buyers. That plays to the advantage of the homeowner, who can sit back and relax, as they field competing bids. Either way you look at it, from the buyers or sellers prospective, one thing is certain – sales of high-priced homes are on the rise across the country, and that's good news for the real estate industry as it tries to regain traction lost over the last four years!
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