The divide in California’s housing market is vast and shows no signs of stopping. According to an article in Zero Hedge, the upper end of the housing is market on fire, while everyone else struggles.
For majority of the borrowers, record-low mortgage rates are not enough to boost originations and offset tight lending standards.
But the luxury housing market in California depicts a completely different story.
“It’s pretty mind-blowing, to be honest,” Los Angeles real estate agent Cindy Ambuehl told the LA Times. “The luxury market has been completely on fire.”
“It’s just a completely different story between the two segments of the market,” said Selma Hepp, senior economist for the California Assn. of Realtors. “Those who are doing well are doing really well.”
To put this in perspective, the article noted that in the third quarter, 1,431 homes worth over $2 million were sold in the six-county Southland, up 14% from a year ago. In the second quarter, 1,436 of such homes were sold, the highest number ever. Sales of homes worth over $10 million are on track this year to double the prior record set during the peak of the last housing bubble.
Meanwhile, for the overall California housing market, Madeline Schnapp, director of economic research for PropertyRadar, said in its September housing report, “The California real estate market is stuck in low gear. High prices and relatively tough lending standards have pushed many would be homeowners to the sidelines.”