There was a 21% increase in homes valued at $1 million or more sold in California in 2010 over the previous year, according to DataQuick Information Systems, La Jolla, Calif.
It is the first time since 2005 that this category has increased on a year-over-year basis. There were 22,529 homes sold for $1 million or more, compared with18,621 in 2009 and the highest number since 2008, when 24,436 homes sold for $1 million-plus. Million-dollar sales peaked in 2005 at 54,773.
In comparison, DataQuick said, there was a 9% year-over-year drop in total home sales in the state, from 460,166 in 2009 to 418,578 last year. About one in 20 homes sold for $1 million dollars in 2010, while the year before it was one in 25, and in 2008 it was one in 16.
“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. 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,” said John Walsh, DataQuick president.
“Additionally, there has always been a safe-haven component in the million-dollar market that attracts wealth,” he said.
The lending institutions most willing to provide mortgage financing for $1 million-plus homes were Wells Fargo, Bank of America and Union Bank. The median down payment for these properties was 40.1%.
Newly built homes accounted for 5.9% of last year’s $1 million-plus sales, down from 6.5% in 2009. Condo sales made up 8% of this category last year, down slightly from 8.3% the year before. Most $1 million-plus condos were sold in Los Angeles, San Francisco and San Diego counties.
Mortgage defaults eased in many million-dollar neighborhoods in 2010. The number of notices of default filed by lenders fell nearly 32% last year compared with 2009 among defaulting homeowners who had original loan balances of $800,000 or more. Many of those homeowners would have paid at least $1 million for their homes.
Last year saw a 14% increase from 2009 in the number of cases where the homeowner owed at least $1 million (including the outstanding mortgage balance and any fees) at the time the home was lost to foreclosure. The increase reflects higher mortgage default levels back in 2009, which translated into more foreclosures in 2010.
