Sales of luxury properties rose dramatically in major United States cities past year. Affluent Americans are scoring key deals made possible by crashing home values and low jumbo rates on mortgages. Another down year is anticipated for the housing industry overall, which is looking at a future decline in costs of up to 25 percent due to foreclosures. Source of article – Million dollar home sales increase as prices continue to slide by MoneyBlogNewz.
Luxurious real estate reacts to stock market wealth
In all of the 20 areas that DataQuick monitors as a real estate analytics firm, million-dollar home sales went up. After four straight years of decline, high-end home revenue increased 18.6 %. Wealthy people are feeling more financially secure as stock values have almost doubled since March 2009. The San Jose, Calif., luxury home industry went up the most last year. The increase in price for properties over $1 million went up 27.4 percent. The homes in NY went up too. There was a 25 percent grow likely due to the Wall Street bonuses. There was an increase of 20 percent for these properties in Washington D.C. There was a 0.4 % increase in luxury homes in Phoenix though as one of the work real estate markets in the country.
Decline in jumbo personal property rates
More individuals have been willing to get luxurious home sales because of jumbo home loan rates. They have gone down quite a bit. Purchasing a $1 million home demands a jumbo loan. Since Fannie Mae and Freddie Mac will not back a jumbo loan, it is much riskier than regular mortgages. In 2009 jumbo mortgages had rates of interest 1.8 percent higher on average than regular mortgages. Last year, the main difference narrowed to 0.6 %. A million dollar jumbo loan will save $780 a month on average with this difference in rate of interest. Money is paid for many luxurious homes though. Cash was paid for 29.4 % of $1 million properties past year, DataQuick claims. About 62.2 percent of buyers paid cash for anything over $5 million. For million-dollar homebuyers who got jumbo loans, the median down payment was 40.1 percent.
Outlook continues to be grim for housing market
Growth in luxurious real estate revenue is doing little to revive a moribund housing industry that is down 80 percent from its peak in 2005. New home sales fell 11.2 percent from Dec. to January. There might be an additional 25 % decrease in home prices in accordance with professionals. In 2010, the quantity of United States foreclosed properties was 26 %. The number is anticipated to go up in the future too. Everyone looking to purchase a home can get a bigger discount by just waiting. Another year or so is when it is anticipated to be at its worst. There is good news to all of this though. According to the National Association of Realtors, an annualized rate of 5.36 million for existing home sales in January was higher than forecast. If the trend continues, existing home sales could increase 8 % in 2011.
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