Luxury home resale prices rising again Study links performance to buyers' prosperity

Nation's Housing

June 09, 1996|By KENNETH R. HARNEY

OWNERS AND SELLERS of high-end houses and condominiums -- the top 10 percent of their local markets -- appear to be in for some good news.

After an extended period of softness in many metropolitan areas, resale prices on high-end homes and condos are rising again, according to new national data, and some are significantly outperforming their local housing markets as a whole.

Luxury homes traditionally have been the most sensitive to emerging price trends. When California, New England and the mid-Atlantic real estate markets sizzled with inflation in the 1980s, upper-bracket properties were hotter -- gained earlier and faster -- than mid-bracket or entry-level houses in the same markets. When these booms went bust, upper-bracket homes often took it hardest at resale, outpacing the market on the way down.

But a new statistical study of large metropolitan real estate markets, conducted by TRW-REDI Property Data, an Anaheim, Calif.-based firm that tracks home values across the country, hints that the pendulum may be swinging back.

From the Atlantic seaboard to California, the report found, luxury units in a majority of the 24 metro areas studied are beginning to register gains. The trend probably is due in part to surging incomes and stock market gains by the professionals and business entrepreneurs who are the prime buyers of such properties, according to TRW-REDI.

All comparisons were for resale prices during the first quarter of 1995 and the first quarter of 1996.

In San Francisco, luxury houses and condos gained 10.8 percent during the year, while prices in the market overall slumped 0.2 percent. During that period of 1994 to 1995, high-end units lost 0.8 percent.

In metropolitan Boston -- another high-tech-oriented market buoyed by recent entrepreneurial success and income growth among professionals and corporate executives -- luxury houses priced $275,000 and up gained by 9 percent from 1995 to 1996. The rest of the Boston market had a 3 percent overall gain.

In Orlando, Fla., the luxury segment -- $125,000 and up -- jumped by 7.7 percent from 1995 to 1996, while the overall market rose by 4.8 percent.

Even in metropolitan areas still struggling with long-term employment problems, upper-end homes generally outperformed the market. In the Washington area, houses and condos over $250,000 rose by 2.6 percent during the year, while the overall market lost 5.9 percent.

How long can homeowners expect to see the trend favoring upper-bracket homes and condos continue? TRW-REDI refuses to make predictions. But in general, a spokesman says, the more high-tech and entrepreneurial your metropolitan area is, "the more likely you're going to see" higher appreciation rates among the upper-bracket properties.

Pub Date: 6/09/96

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