Luxury Home Sales Surge Could Spur A Market Comeback
What makes a luxury property so luxurious?
Quality: Luxury homes are made with high-quality, long-lasting building materials and finished with an elegant touch. In fact, the aesthetic of a luxury property is possibly the most important aspect in making it so, and the deciding feature for many when buying one.
Size: As well as being high-quality, it stands to reason that luxury properties are larger than normal buildings, big enough for each member of a family to have their own space. The communal areas, too, are on a grander scale, with spacious kitchens, living rooms and games rooms.
Exclusive features: These properties usually come with certain added extras not present in a traditional house, such as saunas, spas and swimming pools, cinemas, cellars or guesthouses.
Luxury home sales are up while the number of distressed sales are down, but is this a sign of a housing market comeback? Maybe. According to the National Association of Realtors, the number of homes sold for more than $750,000 has increased by 50 percent in the past year while lower-priced homes fell by 4 percent. It’s a sign that the housing market may make a more robust rebound that many experts initially expected.
The lower number of distressed property sales is being attributed to the lower number of REOs and foreclosures on the market because of aggressive investors snapping up properties. Since there is a hot rental market for such properties, REO and foreclosure investors are holding onto distressed properties, fixing them up and renting them out instead of selling them. On the other hand, wealthier buyers are getting access to the credit they need to purchase higher priced homes. Many of these luxury homes are considered a deal if they’re selling for significantly less than what they would’ve fetched during the height of the housing boom.
But there is some reason for caution. Some real estate market experts are noticing that mortgage companies are taking a more aggressive approach to foreclosures. Foreclosures increased 11 percent in November. And if that trend continues, we may see a larger number of distressed properties on the market in the coming months which could bring down the median home sales price nationwide.
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