Although it has been some time since the housing bubble burst, the real estate market in New Jersey, Pennsylvania, and elsewhere in the U.S. still hasn’t rebounded across all sectors. For instance, recent data indicates that the luxury market is still struggling.
A “luxury listing” is typically defined as a property in the top one-third of active real estate listings. While the real estate market has seen a boost in the past few years as greater demand and short supply has led to higher prices in home sales, luxury listings have not seen the same kind of price increases. In fact, the listing prices for luxury homes are decreasing. Recent data compiled by Trulia, a popular online residential real estate site, indicates that approximately 12 percent of luxury listings in the United States needed a price reduction in order to generate sufficient interest from homebuyers.
In 2015, just 11 percent of luxury listings required a price reduction in order to sell. Mark Uh, a real estate expert and data scientist for Trulia, suggested that a primary reason for the “slow down” in the luxury real estate market is that the prices of these homes “got too high too quickly.” The end result was a market correction, as more informed home buyers realized that they did not have to close quickly on an expensive listing.
Beyond that, noted Uh, the demand for luxury listings still hasn’t outstripped supply because incomes are not rising fast enough, even with the economy rebounding considerably since the economic recession.
Another reason for the struggling luxury market: potential home buyers are able to access more information and often speak with financial and legal experts prior to making any major real estate purchase decisions. As a result, home buyers are more likely to recognize when a property has not been correctly priced.
For more information, check out the MSN.com article, “The Wealthiest Americans Have a New Attitude About Homebuying – and It’s Led to a Crisis in the Luxury Market.”
If you are thinking about buying a home, or selling a home, in New Jersey, you should talk to a qualified real estate attorney first. Joel R. Spivack, Esq., is an experienced real estate lawyer who can help you throughout the home buying, or home selling, process. Contact Mr. Spivack now to schedule a free consultation.