Stock market's slide pinches sales of pricey homes
usatoday.com
High-end home sales have gone squishy, a sign that stock market losses finally have reined in the spending habits of the well-to-do.
Sales of $1 million-plus homes during the first 5 months of 2001 were down 15% from the year-ago period, vs. a 7% decline for home sales generally, according to an analysis by DataQuick Information Systems for USA TODAY. That's a reversal from 2000, when sales over $1 million soared 51% in an otherwise flat market.
The gangbuster performance at the top last year was all the more dazzling because it continued long after the March crash of technology stocks. Analysts say high-end housing is far more responsive to conditions in the stock market than to the factors that drive the market generally -- mortgage rates and the employment situation.
''It's a different (high-end) market now,'' says Henry Jeger, a real estate agent in San Francisco, a city noted for expensive real estate. Jeger says high-end homes, particularly in the range of $2 million to $3 million, are on the market longer. Also, buyers are finding some relief from the hyper-competition of a year ago. Despite slower sales, Jeger says, prices remain high, and he calls conditions now ''the second-best market I've ever seen.''
What's happening locally:
* Million dollar-plus sales in the nine-county San Francisco Bay Area were off 21% in the January-May period from a year ago. That's about twice the percentage drop in Southern California.
* Sales of $1 million-plus homes in Seattle were off 11% in June from a year ago, according to the Northwest Multiple Listing Service.
* In Manhattan, where the median sales price for an apartment is nearly $900,000, sales volume for the April-June period was off 19% from a year ago, according to a report by brokerage Douglas Elliman. Susan Renfrew, an Elliman vice president, says only about 1-in-10 residences is selling above the asking price, vs. about 1-in-3 a year ago. ''The market has moved to something approaching normal,'' Renfrew says.
Softening at the ultra-high end isn't necessarily a precursor to a bust in a housing market that has boomed for 5 years, analysts say. DataQuick analyst John Karevoll says strong sales of starter homes in California offset the slowing at the top.
And some markets are stronger than ever. Jay Butler, director of the Arizona Real Estate Center, says Phoenix area home sales are on pace to eclipse the record set in 1999. Butler credits a solid economy and favorable long-term mortgage rates of about 7% to explain part of the continuing boom. But, he says, the market is also fueled by the attractiveness of real estate as an investment when stocks are foundering.
The National Association of Realtors forecasts home resales in 2001 of 5.15 million, the second-best year ever. NAR forecasts record-high new home sales of 918,000 in 2001. |
