Good thing the rich are rich

From CNBC:

The $1 billion price cut: Luxury real estate gets slashed

The most expensive real-estate in America just became a little less expensive — with $1 billion in price cuts among America’s top listings over the past few months, according to a CNBC analysis.

The high-end real-estate market has seen steep price cuts in recent months as foreign buyers dry up, new tax laws bite the wealthiest states and sellers realize the market peak of 2014-2015 isn’t coming back anytime soon, luxury brokers say.

According to RedFin, the real-estate brokerage and research firm, fully 12 percent of homes listed for $10 million or more saw a price drop in 2018 — double the levels of 2016 and 2015. Just over 500 listings in the U.S. had a combined price cut of $1 billion in the second quarter, according to RedFin.

“Prices were growing too fast for what buyers were willing to pay,” said Taylor Marr, a senior economist at RedFin.

Even homes that see big price cuts are selling for less than their discounted prices. A 20,000 square-foot mansion in the Hamptons, once owned by fashion mogul Vince Camuto, was first listed in 2008 for $100 million. Its price got chopped to $72 million, and it sold this spring for around $50 million – half of its original listing price.

Even the Oracle of Omaha, Warren Buffett, has had to lower his asking price on his beach home in Laguna Beach. The home was listed in 2017 for $11 million, but he has slashed the price to $7.9 million. He’s still likely to make a big profit – he bought the home in the early 1970s for $150,000.

The reasons for the price drops are many. In some cases, the prices for the homes were fantasies. Sellers had irrational expectations or they were using the sky-high prices to attract attention to their properties. The luxury real-estate market has fallen since its peak in 2014 and 2015, and many sellers are finally adjusting to a different market.

Supply of homes at the high end is also high, especially for newer condos and spec homes in New York, Los Angeles and major metro areas.

“There could be an over-supply of these high-end homes,” Marr said.

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16 Responses to Good thing the rich are rich

  1. dentss dunigan says:

    First …last ..and always

  2. The Great Pumpkin says:

    This is why I didn’t agree with lefty’s assessment of the housing market. He was looking at the high end as the canary in the coal mine. Simply not the case. The luxury high end market was the only market really being built in most major markets over the past ten years. How many starter homes were demolished and some top end luxury spec house put up in its place? How many high end condos replaced regular housing in nyc? They simply built up too much supply at the high end of the market and it’s going to take time to fix it.

  3. Blue Ribbon Teacher says:

    In my town, avg selling price, 307 up from 305, sales volume down 35%.

  4. chicagofinance says:

    mix…… bad sign…. avg price is irrelevant….. volume is everything… although peak volume could have been an unsustainable anomaly

    Blue Ribbon Teacher says:
    September 3, 2018 at 11:43 am
    In my town, avg selling price, 307 up from 305, sales volume down 35%

  5. The Great Pumpkin says:

    I just thought about this. This current real estate market is experiencing negative effects from income inequality. The developers, builders, and flippers all followed the money concentrated at the top. Problem is, only so many homes they can buy. The bottom tier of the market has been ignored for home ownership. It is slowly turning into a rental class.

    You see folks, income inequality is going to destroy our economy. I just hope people don’t revolt.

  6. The Great Pumpkin says:

    No inventory in your town?

    Blue Ribbon Teacher says:
    September 3, 2018 at 11:43 am
    In my town, avg selling price, 307 up from 305, sales volume down 35%.

  7. ExEssex says:

    I think what you and others see is a rush to normality. After saying for years “…we can all live together… “ more and more people are trying to get away from the creeping dysfunction of the Urban experiences and create those more idyllic little settings where nice kids can be decent. Hard to get that however at either the very low end of the market or imho the very high end, So you look for something familiar in the ever shrinking middle which btw isn’t really adequate in NJ. So you make a grab to the higher end and become housepoor.

  8. yome says:

    I see homes for sale like this,in and out of market.Price drops.
    I don’t think it is an inventory problem anymore. Move up are staying put
    Plenty in West Windsor ,Princeton Jct area

    https://www.zillow.com/homes/for_sale/West-Windsor-NJ/39037010_zpid/56875_rid/globalrelevanceex_sort/40.371266,-74.508591,40.214144,-74.743081_rect/11_zm/

  9. yome says:

    $21,000 in property tax and still going up

  10. Yo! says:

    $36,000 prop tax = NJ up middle class. Only losers pay less than $36,000 prop tax and $50,000 college room and board each year. These folks never can do Bergen.

  11. Libturd...look me up in Costa Rica says:

    Biggest douchiest Millennial move ever occurred to us today. With school starting tomorrow, our hired nanny (in her young 20s) for after school care cancelled our contract. Does anyone have any idea how hard it is to find an aftercare nanny the day before school starts claiming a seizure? I did find a stop-gap measure for a week or so. But after that? If anyone knows anyone free 3-6, Mon-Fri. LMK

  12. Blue Ribbon Teacher says:

    Libturd,nanny happen to be a high school social studies teacher?

  13. phoenix says:

    And after all those tax dollars we still owe 50 BILLION plus to the retirees. Ouch.

  14. Libturd...look me up in Costa Rica says:

    Nope. Chick from Colorado who moved in with her boyfriend in Montclair.

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