While the entry-level segment of the housing market is stymied by a lack of inventory and pent-up demand, the ultra-luxury segment, at least in these three markets, has crashed. The question is whether this is a temporary blip caused by economic and political unease or an actual trend is as yet unclear. Zerohedge reports:
One month ago, we said that "it is not looking good for the US housing market", when in the latest red flag for the US luxury real estate market, we reported that sales in the Hamptons plunged by half and home prices fell sharply in the second quarter in the ultra-wealthy enclave, New York's favorite weekend haunt for the 1%-ers.
Reuters blamed this on "stock market jitters earlier in the year" which damped the appetite to buy, however one can also blame the halt of offshore money laundering, a slowing global economy, the collapse of the petrodollar, and the drastic drop in Wall Street bonuses. In short: a sudden loss of confidence that a greater fool may emerge just around the corner, which in turn has frozen buyer interest.
We concluded this is just the beginning, and sure enough, several weeks later a similar collapse in the luxury housing segment was reported in a different part of the country. As the Denver Post reported recently, high-end sales that fuel Aspen’s $2 billion-a-year real estate market are evaporating, pushing Pitkin County’s sales volume down more than 42 percent to $546.45 million for the first half of the year from $939.91 million in the same period of 2015.