Luxury Homes For Sale
65There is a disturbing number of luxury homes for sale at the moment. I say “disturbing,” because I am slowly coming to the conclusion that there are so many for sale, we are never going to clear the inventory.
Part of the issue, as far as I am concerned is the mis-use of the term, “luxury,” as applied to a home. It takes more than a granite countertop and a sub-zero “gourmet,” refrigerator to make a luxury property. But the term was used with gleeful abandon during the recent credit boom and it seems as though ever other property that was built between about 1995 and 2005 was a “luxury” home.
They even earned the nick name “McMansions,” and there is no shortage of these “super sized,” properties sitting around the country rotting now that the bust has arrived. Exactly how many there are is difficult to determine because many of them are now bank owned.
And the government seems intent on propping up the banking system in order to allow them to hold these properties off the market. This is – as usual – a very shortsighted approach and one that is in danger of backfiring by prolonging the bust period and creating a new bust further along the road.
Still – being politicians, most governments only look as far ahead as the next election, and delaying the inevitable may seem an attractive option when the blame can then be passed on to a following administration. But the amount of property owned by the banking system is truly staggering and the commercial property bust is now well under way meaning all that lovely bailout money is being hoarded by the banks to keep the stock market afloat (way over valued) or for next year when the commercial property foreclosures peak.
Which means more of the same – more unemployment, more foreclosures, more stock held by the banks, more McMansions back on the market. Where this will end is very hard to predict because the market is so skewed at the moment and there are so many bubbles deflating no one really knows what is happening.
A good deal of the consumer boom of the last 15 years was paid for by borrowing against home equity. No one has any equity at the moment so no one is getting a home equity loan with poor credit and the amount of luxury homes for sale will continue rising.
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House construction all over the world is at a standstill. There are millions too many properties already.
It will eventually correct - and the only way it will correct is dropping prices. House sales in the UK are down 75% and the newspapers are crowing that the recession is over because "average house prices" went up. lol
I agree with you Mark. I think that with the previous high economy all properties were overpriced. Again after the first mentioning the recession over, not in my books, the house prices going up again. They should have first started selling hugh amount of house which are on the market to get the economy off the ground.
In my opinion, no home is or was worth the $300,000 and up price range. Anything above that had better have acres of land to go with it because that’s where the real value is. The only winner in the overpriced real estate market was the builder. The financial devastation we face today was driven by nothing more than GREED!
I'm starting to see builders actually complete projects in the luxury vacation home sector. Now if they would only be able to sell them... :)
You can thank Toll Brothers and the like for the mass production of McMansions. Poorly built, mass produced homes self promoted as "luxury homes" . Alas, they are not luxury homes at all.
A real luxury home is custom and unique and price is usually not a factor at all. These homes are for societies elite income earners and the market fluctuations don't affect them as much as it does the middle and lower classes. They buy or build what they want and they have the CASH to do it. No loans necessary in most cases. I'm not just talking about Americans either, the WORLD knows America's property is for sale on the cheap and they want in!
Hi Kevin - No question. "Luxury" is a very loose definition that has been badly abused. either way - we have a problem that is not going to go away any time soon. :(
We're nowhere near the end of the tunnel. Time to hunker down for a long, cold winter. (It's nice to read something that tells it like it is, and isn't trying to stimulate the economy with a bunch of "the economy is recovering" rhetoric.)
Thank you! Thumbs up on the post.
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2patricias Level 5 Commenter 2 years ago
House construction in the UK seems to be at a standstill. However, about 3 years ago there were several apartment blocks being built along our local coast road. All of them were advertised as 'luxury' flats (apartments). We could see when they were being built that the rooms were very small. However, they had lots of bathrooms! So I guess that was luxury.
Many of the finished flats are now rental properties because so few people can borrow money any more.
And those living in rental units have a huge uphill road to save enough deposit to buy.
It seems a viscious circle.