Very few sales in San Francisco have the claim to fame that they sold for over $3 million.  Matter of fact, we found out while writing this post that the $3 million plus category accounted for 2.64% of all sales in 2008 thus far.

Is there any activity in the high end?

But how has this category changed over time?  Due to rumors circulating about activity in the high end of the market, especially over the last year or two, we wanted to find out.  We looked at numbers of sales in this elite group dating back to 1995.  Granted, there is inflation to account for, we still were interested in the trend and were particularly keen on looking at the time period from 2005 through 2008.

Here’s a look at the numbers:

Numbers of $3 million + Sales Over Time (click to enlarge)

What’s interesting about this chart is that high end sales have yet to take a big hit from this most recent downturn.  If history is any indicator, we can see that the dot com crash put a dent in the chart beginning in 2001.  Will there be a dent in 2009 and 2010?  This will be interesting to revisit in time.  But for now, we can say that 2008 has shaped up surprisingly well for activity on the high end of the market, with single family homes posting their 2nd highest total and condos/tics/lofts/coops tying their highest ever mark.  It should be noted that transactions that took place privately and/or off-market are not reflected here.  These types of transactions are fairly common in this segment of the market, so we would not be surprised if the actual numbers were a smidge higher than these.

Will activity in the luxury market continue to fly high? Only time will tell.

I pulled some stats from the Wasatch Front MLS (WFRMLS) to illustrate how the luxury home market been struggling as of late.  This table includes all of the listed homes in Utah currently on the WFRMLS.  

	Currently for sale	Under Contract	Under Contract/Available
Homes under $400K	14136	3659	26%
Homes over $400K	5835	545	9%

The luxury market has hit hard times for two main reasons.  First, the available financing for luxury homes changed drastically about 6 months ago.  Up until last summer a luxury home Buyer getting a jumbo loan could expect to pay a rate about .25% higher than a conventional loan.  Currently, a jumbo loan is about 1.25% higher that a conventional loan.  That amounts to an increase in monthly payment of around $400-450 on a $500K loan. 

Unfortunately, there isn’t a light at the end of the tunnel for jumbo loans.  There has been a lot of talk about how our government’s economic stimulus plan will affect jumbo loans in Utah.  In my opinion, the effect will be minimal in Utah.  You see, our government’s plan is to raise the limits for conventional loans to help those homeowners and buyers in the luxury segment get financing at better rates.  However, the limits are going to be figured in each county by multiplying the median home price by 1.25%.  The current limit for a conventional loan is $417K and it is unlikely we will improve on that number in all the Counties in Utah…except maybe Summit County.

If financing isn’t enough to deter a buyer from buying a luxury home then not being able to sell their home should do the trick.  Most buyers of luxury homes are not first time homebuyers and therefore need to sell their current home in order to pull the trigger.  Although things have improved significantly in the lower priced homes, this past fall and winter were dreadfully slow.  Luxury home segment seems to get hit the hardest when homes aren’t changing hands.  It’s hard to step up to your dream home when there aren’t any takers on your home.  This “domino” effect should begin to improve as the homes under $400K continue to move.      

In order to move your luxury home you need an aggressive marketing plan and a market savvy Real Estate agent to implement that plan.  Call Candace Bollard (801.735.1930) today for an honest market analysis on your home free of charge.