Home prices between the top and bottom segments of the housing market are rising, which could unleash a “domino effect” that builds first-time and move-up buyer momentum this year, notes a new real estate report by Clear Capital. But the build up in traditional home buyers is coming at the cost of declines in the luxury home market.
“The rate of appreciation for top tier homes is stalling, which is a more direct reflection of waning fair market demand,” says Alex Villacorta, vice president of research and analytics at Clear Capital. “While this is a concerning development, there is a silver lining. The moderating upper tier may give traditional buyers a moment to catch their breath, and entice move-up buyers to enter this segment of the market. The ripple effect of opening up inventory all the way down the price spectrum could provide opportunity and motivation across all segments, including first-time buyers, to enter the marketplace.”
The lower and middle-range ends of the housing market is stabilizing, allowing traditional home buyers to re-emerge. “The next phase of the housing recovery is dependent on healthy demand from this segment,” Villacorta says.