While the overall housing market may have been stuck in neutral this spring, there was no stopping sales of high-end homes.
Sales of homes for $1 million or more hit a seven-year high in California in the second quarter, while sales of $2-million-plus houses hit an all-time record, according to real estate firm CoreLogic DataQuick.
The 9.1% growth in sales of homes with seven-figure price tags, compared with the same period last year, came as overall sales fell, reflecting a housing market split between those who have cash and access to credit and those who do not.
Although tight lending standards and a still-soft jobs picture are keeping first-time home buyers out of the market, higher-end buyers are seeing low interest rates and are more likely to have profited from the strong stock market.
"It's always fascinating to watch this part of the real estate market," CoreLogic analyst Andrew LePage said. "It behaves differently, responds to its own set of criteria. These buyers, especially those in the multimillion-dollar market, are less likely to agonize over credit scores, income and job security, down payments and mortgage interest rates."
There are local factors at play too.
The San Francisco Bay Area saw a 19% jump in sales of seven-figure homes as the surging tech industry kept minting more people who can afford them. An influx of international buyers is propping up the high-end market in parts of Southern California. And an 11.6% year-over-year gain in home prices across the state has pushed many $900,000 houses up north of the million-dollar mark.
In all, 12,826 homes in the state sold for more than $1 million in the second quarter.
Whatever the reason, developers aiming at higher-end buyers say they're seeing strong demand.
Luxury home builder City Ventures has sold 20 of 31 units at its new Ambassador Gardens development in Pasadena, said Chief Executive Mark Buckland, half of those since May. Many of the condos, which start at around $1.5 million, are being scooped up by people from Pasadena and neighboring towns who are selling a larger house and looking to downsize.
"There are a lot of baby boomers looking around thinking, 'I don't need all this property anymore,'" he said. "There aren't a lot of opportunities out there, and that buyer has the assets to afford this."
Although many of City Ventures' customers in Pasadena are move-down buyers paying cash, nearly 70% of the million-dollar homes sold in California in the second quarter were purchased with a mortgage.
For high-end, high-credit borrowers, things have rarely been better.
Interest rates are near historic lows, at 4.12% for a 30-year fixed-rate mortgage,
That has would-be buyers crunching the numbers and deciding the deal makes sense, said Nick Segal, president of real estate brokerage Partners Trust in Beverly Hills.
"If you can buy one, you're going to buy it. Money's cheap and it's a solid market," Segal said. "All these factors are playing into demand."
Of course, as Segal notes, in coastal California, a million-dollar home may not be as rarefied as it sounds. Half of all houses sold in San Francisco County in June went for more than $1 million, and average prices in the most desirable stretches of the Southland routinely hit seven figures.
"For $1 million, you're looking at Mar Vista, Culver City," Segal said. "For $2 million you can start to kiss Brentwood."
But the higher up the spectrum, the hotter things are. Sales north of $2 million — what LePage calls the luxury market — hit an all-time high in the second quarter. And 265 houses sold for more than $5 million, also a record.