The Rich Are Buying Homes
By Les Christie, CNN staff writer March 7, 2011
NEW YORK (CNNMoney) -- The rich are different from you and me: They're buying real estate.
After four straight years of declines, sales of million-dollar homes and condos rose last year in all 20 major metro areas, according to DataQuick Information Systems. On average, these cities saw an 18.6% jump in high-end home sales.
San Jose, Calif., had the biggest market for million-dollar homes, with a 27.4% spike in sales last year; Phoenix saw the smallest increase at just 0.4%.
Meanwhile, sales outside of this price point actually fell 2.8%.
"It hasn't been a good six months for all people, but it was a good six months for rich people," said Glenn Kelman, CEO of Seattle-based real estate brokerage Redfin. "When Wall Street goes up, rich people buy homes."
And Wall Street has gone up: Stock values have nearly doubled from their March 2009 lows.
"Higher income households are feeling better about their financial security," said Greg McBride, chief economist for Bankrate.com.
As their confidence soared, the wealthy took advantage of bargains in expensive homes. An average seaside manor on Jupiter Island, Fla., that might have sold for $4 million in 2006 cost less than $3 million last year. The Brentwood bungalow in L.A. was $1.5 million instead of $2 million, and that Scarsdale colonial fell to $1.1 million after gong for $1.5 million four years ago.
Blogging Bob – Says – Do the rich usually know more about the upcoming trends than the rest of us? I say yes they do. And do they usually put their money where their opinion says to? Yes, again. So perhaps we should take the hint. Is this housing market ready to make a comeback? Looks like someone knows something. Perhaps we should act on that!