Sales of Priciest 1% Homes Soar (Bottom 99% Down)
Second, please note that a Redfin research luxury report shows Sales of Priciest 1% of Homes Climb While Rest of Home Sales Still Down
Home sales so far this year are lower than they were in 2013, but there’s one sliver of the housing market that’s going strong: the very top of it. Sales of the priciest 1 percent of homes are up 21.1 percent so far this year, following a gain of 35.7 percent in 2013. Meanwhile, in the other 99 percent of the market, home sales have fallen 7.6 percent in 2014.
Select City Sales
The price to reach the top 1 percent of the housing market varies widely by metro. In San Francisco, the most expensive 1 percent of homes sold for $5.35 million or more. In Los Angeles, joining the high-end luxury market will set you back at least $3.65 million, but if you’re willing to live a bit farther south in Orange County, you can squeeze into a luxury home for just $3.45 million. The budget luxury buyer could look to Atlanta ($861,000), Minneapolis ($881,000) or Raleigh ($815,000), where access to the top 1 percent of the market can be purchased for six figures rather than seven.
So who can afford these luxury homes? Banks don’t offer conventional loans for homes in this price range. But to put things in perspective, here’s what it would take: In San Francisco, a luxury homebuyer would need a million-dollar down payment and an annual salary of $916,000 to qualify for a 30-year fixed-rate loan, and to afford what would be a $21,369 monthly mortgage payment. In a lower-priced luxury market such as Raleigh, an annual income of just $140,000 could keep a buyer comfortably among the 1 percent in this hypothetical scenario.
Redfin reports 44.7% of luxury buyers paid cash. The overall average was 32%. For additional details, please see Cash is Still King in Home Buying
Mike "Mish" Shedlock