Sales of multi-million dollar homes have surged across the US as wealthy investors hope on cashing in on the bullish upscale property market of the country.
Sales of luxury homes priced at a million or more were up 9% nationwide and those priced above $5 million were up 18%, according to property firm Redfin's latest data. However, sales fell 1% overall.
Prices in the luxury property market have also been competitive as inventory gets tighter due to high demand. For the third quarter of 2014, inventory of homes priced above a million dollars was down 13% and of those priced at $5 million and more was down 47%.
Luxury properties are selling like hot cakes right now. A prior report cited by The Wall Street Journal found that homes priced above $30 million spent lesser time on the market, selling 30% faster than their average-priced counterparts. The luxury real-estate market was perhaps the fastest to rebound from the 2008 housing market crash.
Experts attribute the robust growth in the segment to wealthy investors and their choices.
"It's the investor and the wealthy individual that's keeping the market alive," Mark Zandi, chief economist at Moody's Analytics had told The New Zealand Herald in an interview earlier.
"The wealthy buyers, in particular, are fully engaged now. The stock market is up and times are good for them," he added.
Moreover, banks are more willing to lend jumbo mortgages at the existing low rates and investors are rushing to take advantage of this attractive financing option. US banks approved more than 15,000 home loans in the price range of $1 million to $10 million in the second quarter of 2014 alone.
"Many people are finding out by accident that they can often get a better rate on a $700,000 mortgage than a $400,000 mortgage. The opportunities for wealthier borrowers are now better than they've been in a decade as far as rates and terms," Guy Cecala, publisher of Inside Mortgage Finance, told The Washington Post.
While the US luxury market is showing no signs of a slowdown, the global upscale property segment is growing at a decelerating speed. According to Knight Frank's latest luxury market report, prices in the World's leading cities rose just 0.2% in the three months ended September improving just 4% on a year over year basis.
Jakarta, Los Angeles and Tel Aviv topped the Knight Frank Prime Global Cities Index, Q3 2014 list.