After a near-disastrous 2009, the luxury market appears to be making a comeback, driven by growing buyer confidence, improved financing conditions and more-realistic seller pricing. Despite the housing downturn, attractively priced homes in some of the nation’s most coveted neighborhoods are selling, sometimes fast and sometimes with multiple offers. Nationwide, sales of homes selling for $2 million to $5 million in the first quarter totaled 2,461, up 32% from a year before, says CoreLogic.

For years, Jennifer Metz and her husband John yearned for a bigger home in San Francisco. Three months ago, the couple started looking, figuring that in this shaky economy, their $3million budget should provide them a pick of attractive homes and accommodating sellers. ..They were wrong. Hours after seeing a 5,000-square-foot fixer-upper in Presidio Heights with an asking price around $2.7 million, the Metzes put in a bid—and lost. Soon after, they made another offer on a four-bedroom in Russian Hill. Their bid was rejected.Last week, the Metzes rushed over to a large, dilapidated home in Pacific Heights that needed a lot of work but was asking the (relatively) low price of $2.25 million. The Metzes put in their over-ask bid the next day, but lost that one too: There were nine offers; the winning bid was $2.56 million. "It’s frustrating," says Ms. Metz, a 44-year-old stay-at-home mom whose husband works in finance. "You think you put in a good offer but, no."
By Juliet Chung and James R. Hagerty, May 28, 2010 WSJ

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05/28/10 wsj