LUXURY-HOME SHOPPERS HAVE COME DOWN with a bad case of cold feet. From Malibu to Manhattan, would-be buyers of $5 million-and-up properties are pulling out of pending deals and suspending their searches out of concern over jarring drops in the stock market and dire economic news. Among the shoppers who still feel flush, many are simply waiting to see what will happen to prices. “People feel that if they buy for $5 million today, tomorrow it’s going to be worth $4 million — they don’t want to commit to a price,” says Saddy Delgado, owner of Miami-based Avatar Real Estate Services. The upshot: The market has slowed to a crawl. Properties that once took a few weeks to sell are now taking months and months, even as prices continue to fall. Luxury-home prices are down an estimated 20% since peaking last year, and some savvy pros think they’ll drop another 10% to 15% before bottoming in 2010. That would be later than the likely bottoming of the general housing market; Barron’s has maintained that a leveling-off of the broader housing market is imminent in many regions (“Bottoms Up,” July 14). But the luxe downturn also began much later than the general slump. Until the second half of last year, most of the $5 million-plus market looked to be headed ever skyward.
By Karen Hube, Nov 24, 2008, Barrons