The luxury housing market is on the rise, but it's not enough to lead a recovery.
When it comes to the real estate market, there is no rest for the weary. When it comes to the luxury housing market, there is no slump for the wealthy, The Associated Press reports.
On one side of the fence, the bust continues. Home prices have fallen 30 percent or more since the 2007 peak. Almost a quarter of American homeowners owe more on their house than it’s worth. Another quarter has less than 20 percent equity. Credit restrictions for those seeking a mortgage have tightened. A study of 1,356 investors conducted by Millionaire Corner last June found that 70 percent had a friend or close family member who was having trouble selling their home. The grimmest lesson investors learned from the recession was that one’s primary residence was not a stable financial asset.
Meanwhile, on the other side of the fence, “luxury is the best performing segment of the housing market right now,” Stan Humphries, Zillow.com chief economist told the AP. Wealthy buyers don't have the same hoops to jump through to get credit.
A study of ultra-wealthy households conducted by Millionaire Corner found that three-quarters of households with a net worth of $25 million plus (not including primary residence) own a second home or vacation home. This is up from 67% four years ago. Almost half own a third home or vacation home, up from 35% in 2007. The percentage of those with time shares and vacation clubs has almost doubled.
International buyers are a big part of the rebound in the luxury market, housing experts say. Foreign buyers purchased $82 billion worth of U.S. residential real estate last year--an increase from $66 billion in 2009.
Typically, housing leads the economy out a recession, but this boom is considered to be too rarified to have a wider impact on the market as a whole.