Million-dollar homes in California suffer further sales drop in 2009
Sales of California homes priced at $1 million or more tumbled for a fourth consecutive year in 2009, according to a report released Thursday.
The number of million-dollar-plus homes sold dropped 23.8% to 18,621 in 2009 from 24,436 in 2008, according to San Diego real estate research firm MDA DataQuick.
The decline was the result of buyers holding back, a weak mortgage market for big loans and the drop in home prices over the last several years, dragging the value of many houses below the $1-million threshold, DataQuick said.
“Prestige home sales are a unique sub-category of the real estate market. The buyers and sellers respond to a different set of motivations,” DataQuick President John Walsh said. “In the multimillion-dollar price ranges, decisions are largely discretionary and aren’t as dependent upon jobs, prices and interest rates the way they are for most buyers and sellers.”
The trend underscores the nature of the state’s housing recovery. Sales of California homes at all price levels increased 16.9% last year, to 460,166 from 393,703 in 2008. One in 25 homes sold for $1 million or more last year. The year before it was 1 in 16.
Lower-end homes largely fueled last year’s buying spree as investors and first-time purchasers sensed opportunity in steeply discounted foreclosure properties across the state.
The Federal Housing Administration, which insures mortgages often used by first-time buyers with small down payments, has played a big role in supporting the market for lower-end properties in California and some move-up markets.
In higher-priced California communities, such as Los Angeles County, the limit for FHA loans was increased to $729,750 from $362,790 less than two years ago.
But more-expensive homes haven’t enjoyed that same level of government support, nor were they hit as hard by the subprime mortgage meltdown.
Traditional luxury markets are faring better than those that experienced large price increases during the bubble years. For instance, $1-million-plus home sales in Riverside County dropped 48.6% last year while Los Angeles County saw a 13.3% decline.
The most expensive purchase confirmed by DataQuick last year was a nine-bedroom, 10-bathroom, 22,721-square-foot home in Bel-Air that was built in 2008 and sold for $26.5 million in July. It was also the largest of the $1-million-plus homes sold last year.
