Houston’s River Oaks neighborhood is one of the most exclusive communities in Houston, with real estate often exceeding $20 million. And the median appraisal value of a River Oaks property is $1 million!
With that said, is the process of selling a luxury home in River Oaks, or any other upscale neighborhood of Houston, more difficult than selling a moderately priced home?
Yes, as it only makes sense that the current, tough economy and equally tough housing market has taken its toll on high-end real estate. There are a variety of challenges to overcome when purchasing a luxury home in today’s market:
- The $8,000 first-time homebuyer tax credit excludes buyers who make either $75,000 or $150,000 as a couple.
- Government-insured, low-interest loans that are backed by the FHA are only available to home loans of less than $417,000 in most markets (this limit is set by Congress and changes every year).
- Mortgages that exceed Congress’ limit are considered “jumbo” mortgages. Jumbo mortgages usually have higher interest rates.
- Most jumbo mortgages require a down payment of 20 to 30 percent.
The upscale housing market is also significantly smaller than the mass market. In fact, according to the National Association of Realtors, homes priced over $750,000 accounted for just 2.3 of all sales in 2008.
In addition, the National Association of Realtors recently reported that nearly three-quarters of all real estate agents found that buyers in general were purchasing smaller homes in attempt to avoid the tighter credit restrictions on larger homes.
Finally, many of the buyers who once purchased lofty real estate are now downsizing or staying put in an attempt to recover from their losses in the stock market.
Sales volume for River Oaks took a hard hit, dropping more than 70 percent in the final quarter of 2008, although this community has begun to show signs of improvement during the first, two quarters of 2009.
