The U.S. economy is in full recovery mode! Over the last year, middle class families have jumped at the opportunity to purchase homes with record-low interest rates, contributing the boost in the market. Homes priced under $1 million rose 11% in price during the first half of 2013. Now the luxury home market is gaining momentum as well, with homes priced over $1 million jumping an average of 37% during the same time frame. According to an article released by Financial Post, these are the highest numbers seen since the market's height in 2007. The article goes on to explain that the luxury market tends to follow (closely) behind the broader market, as luxury property purchases tend to be "discretionary spending" and generally waits until a stable market is experienced.
This upswing the in real estate market is a sign of widespread economic growth. According to the article, economists predict a U.S. economic expansion of 2.3% in this quarter alone. How does home purchasing indicate general economic growth? Home buying spurs consumer spending, with decorating, remodels and entertaining.
Wealthy families are gaining confidence in the economy as they are beginning to see stabilization of their investments, and beginning to purchase high-end homes. For this reason, the surge in the luxury real estate market reflects a vote of confidence in the broader economy. Riskin Associates is excited by a recent article published on AOL Real Estate which named Santa Barbara as the #3 city seeing the highest rate of market rebound in the US!