Wednesday, March 24, 2010

High-end home sales making a strong comeback in 2010

There have been many reports that the high-end market is going to come crashing down with a wave of short sales and foreclosures. Most of those stories are pure conjecture so here I'd like to offer some facts. A story from dBusinessNews that has real stats showing the "over one million" market is doing very well indeed. The article is here:
http://sanjose.dbusinessnews.com/shownews.php?newsid=204716&type_news=latest

There are plenty of areas besides Los Altos and Los Altos Hills with homes over $1M. However, what this tells me is that the "fever" we're seeing in the market is not just at the low end. Many of the properties that have come on the market in Los Altos since January priced under $1.5M have sold with multiple offers. That's happening because prices are low compared to recent years and demand is strong.

Now, compare this report to the news this morning that new home sale have dropped 2.2%. At first glance it looks like a conflict, however the report notes that the Western Region saw sales increase 21%. The downturn was in other parts of the country hurt by bad weather.

So, overall demand is improving and high-end is picking up. Are we going to see huge increases in prices through 2010? in my opinion, no. While demand is strong and improving I see no basis for huge price gains. I made my predictions in January so we'll see how they hold up. For now, our local market is doing well.

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