From California to Florida, New York and Connecticut property owners are seeing a major slump.
Luxury home prices in the second quarter of this year fell 3.8% in Los Angeles and 7.8% in San Diego from a year earlier, while gaining 0.2% in San Francisco, according to a First Republic property index that measure houses costing more than $1 million.
Sales of luxury Manhattan apartments are down 25% in the third quarter compared with a year ago, and 'no one's sure where prices will go' as Wall Street firms cut jobs, according to Hall Willkie, of the Brown Harris Stevens brokerage.
Venture capitalist Kelly Porter has just reduced the price on his 26,000 square foot Tudor style mansion set within 7.5 acres in the Los Altos Hills, California, by $7 million. It has it all, Italian statuary, luxury swimming pool, a wine cellar and a Venetian ballroom but it hasn't attracted a buyer.
'The upper end of the property market is not immune to this decline,' said Kenneth Rosen, chairman of the University of California's Fisher Center for Real Estate and Urban Economics in Berkeley.
A 10,340-square-foot home in San Francisco's Pacific Heights is for sale at $14.8 million, 17% below last year's asking price. A 153 acre property with a vineyard near the Napa Valley has sold for $14.7 million, 8% off the price last year.
Even those who don't need a mortgage are not splashing out. 'You have smart buyers seeing a softer market, looking to negotiate a good price. Nobody wants to overpay,' said David Lichtman, chief credit officer of First Republic Bank, a San Francisco-based private bank.
According to James Chalke, a broker at Nelson Shelton & Associates in Beverly Hills, high end sellers need to lower asking prices by 20%. 'What's really happening is that sellers are taking value off their own markup. A property is only worth what a buyer is prepared to pay for it,' he said.
So there is perhaps no need to shed tears for those losing a few million. Indeed Porter bought his mansion for $5 million in 1999 so even taking into account the tens of millions of dollars he says he has spent refurbishing it, he is hardly likely to be making a loss.
