The answer to the question will depend on the location of the home but, some anecdotal evidence is pointing to an answer of yes!
Anyone who knows about real estate knows that the three most important factors concerning the attractiveness of a property are location, location and location! For high-end markets like the one in New York City that has attracted foreign buyers looking to park their cash, movement of inventory in the luxury sector of the market remains relatively healthy.
But, according to an article at the blog Mish’s Global Economic Trend Analysis(worth subscribing to), anecdotal evidence from some other markets around the country seem to suggest that indeed, the high-end of the real estate market may be getting soft.
Is this suggestion of weakness unique only to the geographic areas discussed in the article or, is it elsewhere as well and destined to spread? Only time, and actual statistical evidence, will ultimately tell!
‘…In response to Chicago Suburbs $1 Million+ Home Sales “Not Totally Dead” Yet; Rush for the Exit, I received emails from Maryland and Texas about slowdowns in those states.
Anecdotes do not constitute “data” but all three stories (counting Chicago) show significant weakness at the high-end in widely varying areas with distinct economic backdrop differences.
Paul from Maryland
Mish, I live in the Howard County, Maryland. It’s the 4th wealthiest county in the US. We recently had a presentation by a Realtor on the state of the market. It’s still a very strong seller’s market in the $600K and below range. Inventory is around 2.5 months on a 3 month rolling average basis.
However, the high end is abysmal. Houses asking $2.5M+ are not selling at all. There are 20 on the market with no sales. In the $1M to $2.5M category, 293 are up for sale, with only 27 sold, a weak showing.
A friend of mine who lives in a high end area told me about a neighbor who had asked $1.5M and sold for $850K. The Realtor opined that that a recession next year was likely.
Aaron From Texas
Good article on Chicago. We are seeing a similar slowdown on the high end here in Houston, particularly in the Energy Corridor (West Houston). Right now Texas has a huge problem with skyrocketing residential property taxes. I was on the local news last night talking about the City of Sugar Land’s latest exercise in corporate welfare as they gifted about $8 million in new tax incentives to Schlumberger. That’s $8 million that will be strapped to the backs of homeowners who have no real access to due process to fight our corrupt appraisal districts. It’s actually fairly easy for corporations to get a nice discount from the CADs because Texas is a non-disclosure state, and the CADS get roughed up when they are sued in district court.
Editor’s Note: The Texas market mentioned in this article from Mish is of course impacted by the crash in the price of crude oil but mention was also made of the skyrocketing residential property taxes there. This tax burden is most certainly also felt elsewhere around the country including Long Island in New York and that, at some point (unless that point has already been reached), will begin to have a direct impact on home prices!
Michael Haltman is President of Hallmark Abstract Service in New York. He can be reached at mhaltman@HallmarkAbstractLLC.comGoogle+