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Commercial Foreclosed Properties Fail to Hinder Luxury Market

Residential and commercial foreclosed properties have often been blamed for the decline in property prices and values, particularly in hard hit areas like California. However, 2010 fourth quarter data showed that the luxury home market of San Francisco and several other local areas were able to take on the challenge posed by cheap foreclosures as prices in the luxury category increased during the period.

Prices of luxury dwellings jumped during the period October-December 2010 despite the many lower-priced houses offered at foreclosure auctions in San Francisco. Compared with the 2010 third quarter, prices of higher-end houses increased by 1.6% in the metro area and also recorded a 3.6% rise when compared with the 2009 fourth quarter. During the last quarter of 2010, the average selling rate for a luxury house in San Francisco was around $2.6 million.

Although California foreclosure auctions remained at elevated levels last year, several other local areas in the state posted improved selling prices for luxury residences. In Los Angeles, prices for high end houses jumped by 0.6% in the 2010 fourth quarter compared with the previous three-month period. However, the 2010 fourth quarter average price of $1.97 million was actually lower by 2.2% than the average rate recorded in the same 2009 quarter.

Since California has some of the nation's highest numbers of residential and commercial foreclosed properties, people expect prices to decline in almost all categories, particularly in the luxury segment. However, this is untrue in San Francisco, Los Angeles and even in San Diego where prices of high end homes have been rising. San Diego luxury residential prices were up in the fourth quarter by 0.8% compared with the previous quarter. Compared with one year ago, the increase was 0.6%.

Housing industry analysts stated that more people still buy foreclosure auction homes in the region, but the low interest rates and the growing consumer confidence have convinced buyers of more expensive homes to take the plunge. They also cited the rise in the stock market as another factor since majority of luxury home buyers have their wealth invested in stocks.

Commercial foreclosed properties and distressed homes are expected to rise further in California in 2011. However, luxury home sellers are confident that the segment will be able to keep up, given its strong performance amid the foreclosure crisis. The last time prices of luxury houses increased in the three California markets was in the 2007 second quarter.

Commercial Foreclosed Properties Fail to Hinder Luxury Market is a post from Foreclosure-Auction.net – Your online source for foreclosure property auctions.

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