Sales Sluggish in Starter Luxury Markets

Sales of homes $750,000 to $1.25 million have declined substantially recently, coupled with slowing appreciation. See what metro areas are facing the steepest declines.
By: June Fletcher: REALTOR® Magazine Online
The market for homes $750,000 to $1.25 million is feeling the pinch, according to a study by The Wall Street Journal and The National Association of Home Builders.

Homes in this price range have been more immune to the general malaise of the market. They haven’t been as affected by investors; the average buyer in this market are middle-income families trading up, according to the study. But appreciation has been sluggish in most areas, and the number of homes sold in this category has declined substantially.

In the 2005 fourth quarter, 65 metro markets had 100 or more sales in that price range. A year later, that figure had dropped by more than half, to 32. Nearly half of those 32 markets saw prices flatten or decline during the fourth quarter compared to the same period a year earlier. Overall, the median price of these 32 markets rose a modest 1.4 percent to $890,000.

Real estate professionals say that in many markets competition is great with eager sellers dropping prices.

Metro markets with the largest decline in prices are St. Louis; Edison, N.J.; Miami and Miami Beach; Chicago-Naperville-Joliet; and San Francisco-San-Mateo-Redwood City.