There is currently an oversupply of high-end homes for sale in the US and this has given buyers more bargaining power and options, the Wall Street Journal reported. Numbers from the National Association of Realtors (NAR) show that the inventory of homes priced from USD500,000 to USD750,000 rose 15.9 percent in America during March compared with the same period last year.
The inventory of homes priced at USD1 million or above also increased climbing 12.6 percent y-o-y, the newspaper added. Inventories did decline in April but experts believe this was likely due to the seasonal sales that usually take place in the spring. It was noted that more expensive homes are sitting longer than those in the midrange and low-price sectors.
Lawrence Yun, NAR’s chief economist, told the newspaper that worldwide stock-market volatility has caused wealthy buyers to be more cautious while foreign buyers have also declined y-o-y due to the strong dollar and other economic issues overseas. “The stock market has come back up, but we don’t know yet if that means the upper-end home buying market will begin to return,” Yun stated.
Some real estate experts note that this could also be a normalization of the home market. Brad Blackwell, executive vice president and portfolio business manager for Wells Fargo Home Mortgage, pointed out that this could be a positive for jumbo borrowers, who now have a wider choice of homes. In addition to this, they will also no longer have to bend to the demands of sellers who require them to waive financing and inspection contingencies to compete with cash buyers.
The high-end market in San Francisco has been one of the hardest hit. Maggie Visser, an agent with the San Francisco-based Paragon Real Estate, explained to the newspaper that stock-market fluctuations have slowed sales with buyers from the tech sector dwindling since many of them would cash out stock options to buy homes. The San Francisco market for newly constructed condo units has been hurt by a lack of Chinese buyers who were very prominent in the past few years, Visser added.
