Million Dollar Home Sales Jump in U.S. as Wealthy Return – Bloomberg 08-07-13

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DataQuick said home sales priced at over $1 million rose an average of 37 percent in half1, 2013 from a year earlier to the highest level since 2007, and versus 11 percent for houses priced under $1 million.

Susan Wachter at Wharton said wealthy purchasers are diving into real estate a year after a housing recovery built on purchases by middle-class families began. Wachter said the luxury market tends to be discretionary spending and usually lags the broader market cycles.

Homes priced at more than $1 million in the top four cities lost 46 percent of their value during the housing crash, but have since more than doubled. Home prices in the broader market fell to $154,600 in early 2012 and increased to $214,200 in June.

Andrew LePage at DataQuick said the stock market has created a tremendous amount of wealth, and that’s being put into homes.

Cap Gemini and Royal Bank of Canada said North American millionaires have 37 percent of their assets in stocks.

Nikki Michelini at Aspiriant said wealthy families are gaining confidence in the economy and seeing stability in their investments. Michelini said 8 out of 10 purchases of luxury real estate are made with cash because it makes bids more competitive, and most buyers then take out mortgages at low rates and invest the proceeds of the loan. Michelini said wealthy buyers often use jumbo mortgages that typically have higher standards, and prefer ARMs because there is no reason to fear a payment spike as they can always pay off the loan.

The median economist predicts the US economy will grow by 2.3 percent in Q3 versus 1.7 percent in Q2 and grow every quarter through at least Q3, 2014.

Read the full article at  http://www.bloomberg.com/news/2013-08-08/million-dollar-home-sales-jump-in-u-s-as-wealthy-return.html

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