High End Homes Hold Up In Value

This article from the New York Times shows a continuing trend -- the rich are getting richer, the middle is trying to hold steady, and, as the author put it, the poor "are getting creamed." It is so hard to bypass those roadblocks from one segment of the population to another...

The homes that are having a hard time selling are the average-priced homes,” said Vanessa Justice, a real estate agent with Pacific Union GMAC in the Bay Area, where the median house price is about $750,000. For upper-end homes, she said, “it’s actually pretty crazy right now.”

It has been a while since real estate agents used the word “crazy” in a positive way, but Ms. Justice is onto something here: the high end of the market is surviving the slump much better than any other segment. Even as foreclosures keep rising and overall sales continue to plummet, more expensive homes have staged a bit of a comeback in recent months. They’re spending less time languishing on the market than others, and their prices appear to be holding up better.

This split in the market helps explain why the sales of Manhattan apartments, some of the priciest homes in the country, have remained fairly strong...

...Finally, both the recent rise in interest rates and the problems in the mortgage market have had a much bigger effect on low-income and middle-class buyers than affluent ones. It’s become harder to get a subprime mortgage, while the uptick in interest rates this year has added about $100 to the monthly payment on an average fixed-rate 30-year mortgage.

As Mark Zandi, chief economist of Moody’s Economy.com, summed up the market: “The low end is getting creamed. The middle is struggling. The high end is running on its own dynamic.”