Hat tip to Aztec for sending along this article from Bloomberg:
By Jody Shenn
June 16 (Bloomberg) — Prices for the most expensive U.S. homes may not reach bottom for another few years, according to JPMorgan Chase & Co. analysts. (click on image for clarity)
The CHART OF THE DAY shows the supply of unsold homes by price in California, data that the mortgage-bond analysts including John Sim and Matthew Jozoff used in a June 12 report to illustrate the weakening market for the most-expensive residential properties. The supply of homes priced $750,000 to $1 million held steady while the supply of more expensive properties increased.
“Tighter lending standards and the lack of cheap financing for these borrowers continue to be key issues,” the New York-based analysts wrote, referring to “jumbo” mortgages. That’s after so-called interest-only and option adjustable-rate loans were a “major driver” of soaring values, they said.
The government’s moves to aid the housing market include the Federal Reserve’s mortgage-bond purchases to drive down interest rates; President Barack Obama’s “Home Affordable” loan modification and refinancing programs; and new tax credits for some first-time buyers. None of the U.S. initiatives “directly focused on helping the sales of these so-called millionaire homes,” the analysts wrote.
“Currently, we have national home prices bottoming in 2011,” they said. “However, prices for more expensive homes may not bottom out until 2012, and ultimately result in peak-to-trough declines in excess of 60 percent (compared to 40 percent nationally).”
“California is probably worse than other states, but higher-priced homes in general are going to be a problem,” Sim said in a telephone interview today. The state’s median sales price for existing single-family homes fell 37 percent in April from a year earlier, to $256,700, according to California’s Association of Realtors. Nationwide, the price fell 15 percent to $169,800, according to the National Association of Realtors.