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Wednesday, August 24, 2011

Higher-End Housing Hits a Wall

Please the that conforming loan limits will be lowered on October.  Also, the federal government may reduce the mortgage interest tax deduction from $1.1 million to loans under $500,000 for a primary residence.  Both these factors might be putting a chill on the high end housing market.
Most of America won't shed a tear for those who own higher-priced homes, especially given that the median home price in the nation has now fallen to just $174,000, but investors and homeowners alike should take note: Higher priced homes are taking a hit and the outlook for them is worse than the overall market.
And....
So why should we care about this segment of the market, if it's barely 10 percent of the overall housing market? Because when I say "high-end" I'm not talking multi-million dollar homes, I'm talking about homes over $500,000, which are move-up homes. If there's no move-up market, then there can be no real recovery because all the action is taking place in the distressed market, which then artificially pulls down the national home price numbers and scares the rest of the market away.
No move-up market also means those in higher priced homes who need to sell can't, and that could push up delinquencies on jumbo and even higher-priced conforming loans. Think of all the baby boomers who need to get out of big suburban family homes they can no longer afford. Suffice it to say, we need all segments of the housing market pushing forward in order to get the full market back to health.
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