California homes priced at $1 million or more experienced a sales boom in 2010, the first increase in five years. The reason: High-end home shoppers went bargain hunting as certain parts of the economy improved but luxury home prices remained depressed.
“Prestige home buyers respond to a different set of motivations than the rest of us. Their decisions are less dependent on jobs, prices and interest rates, and more on how their portfolio is doing
Even if prices fall further, he said, “If you are borrowing, buying today makes a lot of sense because interest rates are just incredibly low.”
Two other reasons for the $1-million-and-up market increase are the return of the jumbo mortgage market in 2010 and a comeback in the stock market, which saw huge losses in 2009, Thornberg said. “A lot of folks who were reeling from equity losses bounced back.”
Cash purchases also inched upward among $1-million buyers last year to 29.4% of sales, up from 28.9% in 2009 and the highest for any year since 1994. But even cash purchases can be motivated by low interest rates.
Million-dollar-plus sales hit a high of 54,773 in 2005 and then dropped through 2009. Last year’s sales increase came despite a winnowing in the category; 3,380 of the homes that sold statewide for less than $1 million had previously sold for $1 million or more, DataQuick analysis shows.
Source: LA Times