Luxury home market continues to struggle in Utah

The luxury market has hit hard times for two main reasons.  First, the available financing for luxury homes changed drastically about 6 months ago.  Up until last summer a luxury home Buyer getting a jumbo loan could expect to pay a rate about .25% higher than a conventional loan.  Currently, a jumbo loan is about 1.25% higher that a conventional loan.  That amounts to an increase in monthly payment of around $400-450 on a $500K loan. 

Unfortunately, there isn’t a light at the end of the tunnel for jumbo loans.  There has been a lot of talk about how our government’s economic stimulus plan will affect jumbo loans in Utah.  In my opinion, the effect will be minimal in Utah.  You see, our government’s plan is to raise the limits for conventional loans to help those homeowners and buyers in the luxury segment get financing at better rates.  However, the limits are going to be figured in each county by multiplying the median home price by 1.25%.  The current limit for a conventional loan is $417K and it is unlikely we will improve on that number in all the Counties in Utah…except maybe Summit County.

If financing isn’t enough to deter a buyer from buying a luxury home then not being able to sell their home should do the trick.  Most buyers of luxury homes are not first time homebuyers and therefore need to sell their current home in order to pull the trigger.  Although things have been improving significantly in the lower priced homes, this past fall and winter were dreadfully slow.  Luxury home segment seems to get hit the hardest when homes aren’t changing hands.  It’s hard to step up to your dream home when there aren’t any takers on your home.  This “domino” effect should begin to improve as the homes under $400K continue to move.      

In order to move your luxury home you need an aggressive marketing plan and a market savvy Real Estate agent to implement that plan.  Call us today for an honest market analysis on your home free of charge.