U.S. luxury home prices may have peaked as economic problems abroad limit the number of foreign buyers.
Redfin Corp., a brokerage and real estate data provider, reported that prices for the top 5 percent of home sales were flat in 2015 while prices for all other home sales rose by 4.9 percent.
Economic problems in such countries as Brazil, China and Russia are weakening the top end of the residential real estate market.
Dan Conn, CEO of Christie’s International Real Estate, told Bloomberg News: “There’s volatility in China and Russia and there’s the oil issue in the Middle East. I have no doubt there’s an impact overall on the market. You’re not going to see material price increases in most markets.”
The strength of the U.S. dollar against South American currencies has hurt condo sales in Miami, according to Peter Zawleski, owner of Cranespotters.com, a website that tracks development in South Florida.
Anthony M. Graziano, senior managing director at Integra Realty Resources, told Bloomberg News that pre-construction sales of Miami condos slumped last year. Integra data for the Miami condo market shows that buyers signed 25 percent fewer pre-construction purchase contracts.
In the Los Angeles area, a six-bedroom mansion is listed for sale for a reduced price of $3.68 million, but no offers have emerged. Real estate agent Kanney Zahn, who represents the Chinese couple who own the mansion, told Bloomberg they want to sell to raise cash following a recent downturn in the Chinese stock market.
In Houston, sharply lower oil prices are hitting the luxury home market hard. The Houston Association of Realtors reported that sales of homes priced above $500,000 fell 17percent in December from the year-earlier level.
In San Francisco, the luxury home market is still strong, but the inventory of homes listed for sale above $500,000 surged to a record level in October, Patrick Carlisle, chief market analyst at Paragon Research.
Carlisle told Bloomberg that “more sellers are jumping in and more buyers are holding off because they’re worried about where the volatility is going.” [Bloomberg News] — Mike Seemuth