California’s Luxury Home Market Thrives In 2013

Posted by Patrick Barnard on January 31, 2014 No Comments
Categories : Residential Mortgage

The number of California homes that sold for a million dollars or more rose last year to the highest level in six years – the result of rising home prices and an improving economy, among other factors, according to a report from DataQuick.

A total of 39,175 homes sold for a million dollars or more in 2013 in California – up 45.1% from 26,993 in 2012. It was the highest number sold since 42,506 in 2007, notes DataQuick.

The all-time high was in 2005, when 54,773 homes sold for $1 million or more. The company says last year's 45.1% year-over-year increase in $1 million-plus sales easily eclipsed the state's housing market as a whole: Overall home sales totaled 446,319 last year – down 0.6% from 449,059 in 2012.

Last year's increase in luxury home sales reflects the combination of rising demand and sharp price appreciation that pushed many homes up over the million-dollar threshold, according to DataQuick.

John Walsh, president of the company, notes the uniqueness of the luxury home market. "It responds to its own set of economic factors. Things like job growth, mortgage interest rates and migration patterns do not play the same role as initial public offerings, stock market performance or how well one type of investment does compared to another, and where one wants to park one's excess money," he explains.

"The $2 million threshold seems to be a more interesting cutoff point. Homes selling below that level do seem more responsive to the more traditional market factors," Walsh adds.

DataQuick says price appreciation tugged many more homes up over the $1 million mark last year, but it was the multimillion-dollar home sales that set records. Statewide, 840 homes sold for more than $5 million last year – an all-time high – which is up 20.3% from the previous high of 698 in 2012.

On the lower end of the luxury home market, in the $1 million-$2 million range, 25,352 sold last year – up 42.5% from 17,791 in 2012 but still 26.1% behind the all-time high of 34,313 in 2005.

Last year, 10,602 of the homes that sold for $1 million or more were bought with cash – a record number – up from 7,791 in 2012. Cash was used more frequently the higher up the price scale. Of those who did finance their purchase last year, the median down payment was 30.0% of the purchase price.

The entire report from DataQuick can be found here.

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