The Haves Vs. The Have Nots: How The Luxury Real Estate Market Is Winning The Game

by Richard Soto - Date: 2007-09-30 - Word Count: 589 Share This!

While the rest of the national real estate market is taking a turn for the worse, high end properties are continuing to sell. In fact, luxury sales in many markets are booming right now.

Homes that are in the mid-to-low price range are failing to sell. Sales are down in many markets by double digit percentage points. On the other hand, in Dallas for instance, high end home sales are up by approximately 25 percent over last year.

Why such a difference between the two markets? For starters, the sub prime loan crisis has led to much more stringent lending practices, so many buyers are unable to get the financing they need. Luxury homeowners however, typically have enough money on hand to either purchase the home outright, or to guarantee that they have the ability to pay back any loans they may take on.

The market problems we are seeing right now don't have much affect on high end buyers, again because their financial well being shelters them from what they would consider minor economic fluctuations.

Often negotiating the price of a home isn't of much concern either to luxury buyers. Buyers in this economic sector are looking more for a lifestyle than a bargain. They want space, privacy, heated floors, indoor pools, and home gyms. These buyers are looking for a sanctuary as well as convenience. Haggling over the price isn't of particular concern.

Buyers in the mid to lower strata generally are looking for nice kitchens, modern bathrooms, and enough space to live comfortably. They are also looking for a solid investment, so interest rate changes, market slumps, and price negotiations are all major concerns.

Non-luxury buyers are feeling apprehensive about the changing market conditions, and are hesitant to throw their hats into the real estate ring. They are also quite nervous about the future, as the media is throwing around words like "recession". Buyers and homeowners are uncertain about how much further the market will fall, and how much property values will be affected.

Those investing in the high end housing market are more optimistic about the future appreciation of real estate. As mentioned earlier, they can afford to ride out most of these market highs and lows. They also have faith in real estate as an investment strategy. They do not have the burden of having to worry about their mortgages in the coming months; they're focused on long term growth and the appreciation of their property values.

There is also an increase in the amount of wealth that buyers have acquired in recent years. Baby boomers who have played smart on the stock market, are on the rise. There are also lot of inheritance recipients who are celebrating their newfound wealth by investing in real estate. There is more money out there to be had, and those who have it are spending it.

Aside from the money issue (or non-issue, as the case may be), the luxury real estate market is also seeing an increase of available properties. In the Dallas area, there are roughly 35 percent more high end properties on the market than last year.

While average homeowners are feeling the crunch of the recent economic downturn, so far the wealthy are remaining relatively unscathed. The housing market is plummeting in some areas, but those in the market for a million dollar plus home seem to be on the rise. The difference between these two markets may even out in the future, but for now high end buyers and sellers should enjoy the ride.

Related Tags: dallas real estate, luxury real estate, dallas homes, dallas luxury real estate

Richard Soto is a Dallas TX real estate agent with many years of experience, and has a solid background in marketing. Richard specializes in luxury Dallas real estate.

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