Categorized | Residential

Southern California Luxury Home Market Sees Big Drop

Please Share!

The number of sales of high-end luxury properties in the Southern California residential real estate market has hit the lowest level in over two years. The setback is being attributed to the reduction in the overall mortgage size that is eligible for government backing.

Loan limits for government-backed mortgages were reduced by more than one hundred thousand dollars, from over seven hundred twenty-nine thousand to six hundred twenty-five thousand dollars. As such, overall sales in both Los Angeles and Orange counties were hit the hardest by the reduction.

Sale prices in the region fell nearly five percent as well, as overall demand for residential real estate properties continues to drop. The decline in the loan limit for government-backed loans is not the only factor that has caused the decline in real estate sales. Banks continue to be very stringent with respect to lending, many it difficult for potential homebuyers to qualify for a mortgage loan. Those that do qualify for a mortgage loan are staying away from the housing market due to overall uncertainty and a continuously weak job market.

The combination of factors has created a perfect storm of sorts, and has led to declining housing market that has no bottom in sight. Analysts believe that the loan limit needs to be increased back to its previous rate in order to promote growth in the housing market. Some analysts believe that the size of the loan limit has no real association with overall sales and values, as even with the increased loan limit, the market faced unprecedented struggles in the past year.

Please Share!

About James Pattric

James writes for the Residential category (along with Josh Johnson) and also heads up the Resources category.

Leave a Reply

Twitter Chat