Sales are much weaker for lower-priced luxury homes, those in the range of $1 million to $3 million, because the credit crunch is making it more difficult for buyers in that market to qualify for loans. That hangs up sellers in that market who want to trade up. “Though they may not require a mortgage themselves, [they] might be waiting to sell a $1 million or $2 million home and are depending on other buyers to move up,” Goodwin said.
With home prices fluctuating across all ranges, BusinessWeek.com decided to test your ability to guess how much houses are listed for in this uncertain real estate market. We created an interactive quiz that includes properties that list from $350,000 to more than $50 million.
Moore-Moore said the ultra-high-end market—generally above $5 million—has remained robust because rich buyers are looking for trophy homes and the supply is limited. Even in weak markets like Las Vegas, luxury condos on the Strip are in high demand, she said. The same is true of Beverly Hills in California and Palm Beach in Florida.
She expects fewer buyers from the financial industry and more foreign buyers in coming months as problems on Wall Street increase. Citigroup (C), facing losses related to subprime-related debt, is expected to lay off thousands more workers. And layoffs are under way at Goldman Sachs Group (GS), Merrill Lynch (MER), Bear Stearns (BSC), and Morgan Stanley (MS).
“When you get into the luxury market, it’s not about square footage multiplied by X dollars,” she said. “It’s about the amenities and the unique features.”