Real Estate Guru

Are luxury home market values collapsing?
Sellers are waiting longer for buyers and getting less than they hoped.

With the coastal Orange County luxury housing market seeing hefty price reductions and closed sales considerably lower than the original asking price, it seems as though the collapse of home values has finally hit the multimillion dollar home market.

A total of 291 homes priced at $1 million or higher in Laguna Beach, Newport Beach, San Clemente and Dana Point combined have seen price reductions in the last 30 days - several of those knocking home prices down by $1 million or more on high priced estates...

...Numbers provided by Brea-based consulting firm Real Data Strategies confirm this trend. From July 2008 to end of June, homes priced at $1 million and above received an average price reduction of 85.85 percent. By comparison, homes priced at $500,000 and lower received an average price reduction of 92.39 percent.

Some Realtors say that this recession will reflect the last recession in the early 90s, and home prices will devalue by 30 percent or more from their price in the 2004-2005 peak during the housing boom, before stabilizing.

"Last recession, in the early 90s, oceanfront (houses) dropped 50 percent before stabilizing," said broker Phil Immel.

That could mean for some high-end coastal homes, though already heading south in value, prices will need to drop even lower before stabilizing.

A waterfront home in Newport Beach's Balboa Coves community has dropped recently from $3.9 million to $3.7 million. However, the home sold for $2.9 million during the boom in 2004. If home values need to come down 30 percent from peak prices, the price of this home would eventually drop to $2.32 million.

Written by Kelli Hart
The Orange County Register
http://www.ocregister.com/articles/million-market-home-2529223-homes-price