"The rich are feeling better about their prospects and starting to rediscover real estate as a place to park money," notes one analyst who was seemingly not alive 7 years ago, adding, "the stock market has created a tremendous amount of wealth, and that's being put into homes." It seems we are destined to 'never' learn that too much of a good thing might just not be... a good thing.
Following President Obama's homeownership is patriotic roadshow this week and his almost too ironic to be real comments that the U.S. has "got to turn the page on this kind of bubble-and-bust mentality that helped to create this mess in the first place," it appears we have gone perfectly 360 as once again home prices for the wealthiest are soaring.
With the Dow up 18% this year (and American millionaires having around 37% of their assets in stocks), there is plenty of unrealized 'wealth' to go around and for buyers of real estate selling for more than $1 million, rising interest rates may be less relevant. About 8 out of 10 purchases of luxury real estate are made in cash because it makes bids more competitive noted one wealth manager and sure enough... sales of homes priced at more than $1 million jumped an average 37% in 2013’s first half from a year earlier to the highest level since 2007 while sales of homes below $1 million rose only 11%.
Homes priced at more than $1 million lost about 46% of their value during the housing crash; since then, based on Bloomberg's survey of Zillow data, their value has more than doubled.
Via Bloomberg [4],
Sales of homes priced at more than $1 million jumped an average 37 percent in 2013’s first half from a year earlier to the highest level since 2007, according to DataQuick. Transactions priced at less than $1 million rose 11 percent in the same period to the highest since 2009, data from the National Association of Realtors show.
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Homes priced at more than $1 million lost about 46 percent of their value during the housing crash, according to a Bloomberg survey of sales in the top four cities, based on valuation data from Zillow.com. Since then, their value has more than doubled. Home prices in the broader market fell to $154,600 in early 2012 and increased to $214,200 in June, according to the Realtor’s group.
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“The rich are feeling better about their prospects and starting to rediscover real estate as a place to park money,” LePage said. “The stock market has created a tremendous amount of wealth, and that’s being put into homes.”
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President Barack Obama said in a speech in Phoenix this week that the U.S. has “got to turn the page on this kind of bubble-and-bust mentality that helped to create this mess in the first place,” as he proposed measures to boost homeownership.
For buyers of real estate selling for more than $1 million, rising interest rates may be less relevant. About eight out of 10 purchases of luxury real estate are made in cash because it makes bids more competitive
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“I decided to grab it while the price was low because I see the market starting to head up.”