When a castle is a home.

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The $10 Million Home, Never Hotter

Jonathan Miller writes about the housing economy and other aspects of real estate. He began a real estate blog, the Matrix, in 2005, and has written a column for Curbed.com. He is co-founder of Miller Samuel, a residential real estate appraisal company, and the commercial valuation firm Miller Cicero.
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As the U.S. housing market cools from last year’s overheated state, sales of homes at the top haven't been following the same script.  Prices and sales at the upper reaches are soaring.

Sales of homes in Southern California costing $2 million and more are at record levels. Sales of homes costing more than $10 million in Los Angeles are up almost 400 percent since 2007. In Miami, luxury home sales are roughly double 2007 totals.

high-end sales chart

Buyers of expensive homes, many flush with stock market gains and benefiting from a rebounding economy, have been using cash to sidestep tight mortgage-lending conditions. Foreign buyers have continued to view U.S. real estate as a haven, also using cash to snap up luxury real estate.

But the rise in high-end sales isn't just a cash phenomenon. Low mortgage rates are crucial because the well-off tend to have good credit records and can secure loan approval.

Although New York's high-end real estate prices have been setting records too, their sales haven’t jumped as in other markets largely because the 2007 volume and prices were already so high as a result of record Wall Street bonuses.

Unless economic and credit conditions improve a lot, I expect continued and disproportionate strength at the top of the housing market. 

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Jonathan J Miller at jmiller@millersamuel.com

To contact the editor on this story:
James Greiff at jgreiff@bloomberg.net