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The top is taking longer to slide

August 03, 2008|Peter Y. Hong

Whether expensive homes in prestigious areas will escape the housing crash remains a hotly debated topic. I hear from many readers (and see some examples where I live) of houses still selling, sometimes quickly, and sometimes for prices higher than the owners paid just a couple of years ago.

Yet economists I interview contend prices at the high end are just sticky -- they take longer to fall, but do so eventually. Holdout sellers at some point cave in, raising supply, and trade-up buyers from other areas don't have as much money to buy in the pricier neighborhoods, squeezing demand.

John Karevoll, chief analyst at DataQuick Information Systems, has provided a breakdown of Southern California home sales in June that shows the top end is falling as well.

The median price for the top tenth of homes sold in June was $900,000, down from $1,129,500 the same month a year earlier. That's a 20% drop.

The price peak for that market segment occurred in June 2007, according to DataQuick.

The bottom tenth of homes sold fared worse, with a 41% drop in the median sale price.

But the June decline in the top tenth shows a reversal from last summer. In June 2007, the median sale price for that tier was up 3%, while prices in the bottom tenth fell 11% from the previous year.

So the top is sliding. Or is it? The June median sale price for that tier was up from the May median of $875,000, with roughly the same number of transactions.

A one-month bump may not mean much, of course. A few more months of data will give us a better picture.

-- Peter Y. Hong

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