An economic recession and falling real estate values have created million dollar bargains--and apparently more Californians are becoming interested in buying them, according to a report released today by DataQuick Information Systems.
While overall homes sales in California declined last year, the number that sold for $1 million or more rose for the first time in five years. Last year 22,549 California homes sold for $1 million or more, up 21 percent from 2009.
The allure is that a million dollar home is a lot nicer looking and in a lot nicer neighborhood today than in the boom years when all you could get for that sum in many parts of California was a tract house, noted DataQuick analyst Andrew LePage.
Another reason for the uptick in purchases of expensive homes may be that those who can afford them feel more confident about their financial well-being than they did a year ago, when the number of million dollar plus homes sold in the state sank to an extraordinarily low level.
"Prestige home buyers respond to a different set of motivations than the rest of us. Their decisions are less dependent on jobs, prices and interest rates, and more on how their portfolio is doing, " DataQuick President John Walsh said in a prepared statement.
"When the financial world was full of uncertainty a couple of years back, and the jumbo loan market dried up, luxury sales plummeted. As the economy started its top down recovery, some wealthy buyers went looking for a bargain, he said.
"Additionally, there has always been a safe-haven component in the million-dollar market that attracts wealth," he said.
Among California communities where the vast majority of home sales were $1 million-plus last year were San Marino in Los Angeles County, Los Altos in Santa Clara County, Rancho Santa Ve in San Diego County and Atherton and Hillsborough in San Mateo County. The most expensive confirmed purchase, based on public records was a 35,378-square-foot, 15-bedroom, 7-bathroom house in Bel Air that sold for $50 million in June.
In the top hundred California communities with home sales of $1 million and more were four in Inland Southern California, all of which were in the Coachella Valley desert resort area.
Public records show that 132 homes priced at $1 million or more sold last year in La Quinta, which was up from 102 in 2009 and the largest number sold last year in Riverside or San Bernardino counties. The most expensive home sale in La Quinta last year was $5 million. Palm Desert recorded the highest price sales last year at $9.1 million.
Other desert communities with large numbers of expensive homes were Rancho Mirage and Indian Wells.
--Leslie Berkman
lberkman@PE.com