Thursday, July 8, 2010

Is the Luxury Real Estate Rebounding?

Is the Luxury Real Estate Rebounding?

Despite the reported challenges facing the housing market, there’s news about the luxury segment that seems very promising.

On May 28, The Wall Street Journal released the results of a study conducted by MDA DataQuick, a real estate information provider, stating that in certain parts of the country, sales of homes over $2 million in the first quarter of 2010 were reminiscent of numbers seen in 2005, when existing-home sales volume peaked nationwide.

The WSJ singled out Beverly Hills, San Francisco and Menlo Park in California as well as Manhattan and The Hamptons in New York as having particularly strong rebounds. Even Las Vegas and Miami—markets with significant troubles over the past few years—are experiencing a “strong uptick,” the Journal reported.

What’s driving the trend? Price reductions and low interest rates have likely spurred sales. Plus, many luxury buyers in places like Miami are international buyers, and the exchange rate has been very favorable lately.

The WSJ study is not the only positive news for luxury homeowners. According to the National Association of Realtors, sales of existing single family homes valued at $1 million or more in May (the latest month for which statistics are available) rose 77.3% year-over-year. And the Institute for Luxury Home Marketing reports a “strong reduction” in average days-on-market for active listings of luxury homes.

If you’re a seller--particularly in the markets mentioned above--this is good news. If you’re a buyer, it’s even better. Many parts of the U.S. are still strong buyers’ markets due to increasing inventories and decreasing prices.

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