Mansions and penthouses are lingering on the market in major US luxury markets. Plummeting interest among foreign buyers is largely to blame.
- Foreign buyers are not buying luxury residential real estate in the US, and it's causing major markets to slow down, according to The Wall Street Journal.
- According to a report by the National Association of Realtors, the number of purchases made by Chinese buyers dropped by 56% from April 2018 to March 2019.
- From LA to New York, developers and brokers across the country are cutting prices in an attempt to sell luxury real estate.
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Multimillion-dollar homes in the most popular markets across the US aren't selling.
In the first quarter of 2019, homes sales listed at $2 million and above saw a year-over-year decrease of 16%. And, while homes sales fell, inventory rose by 14%.
The Wall Street Journal's Laura Kusisto reported that one of the reasons there's a glut of luxury residential real estate across the US is because foreign buyers are buying less. Industry professionals told Kusisto the pullback can be traced back to a slowing global economy, a stronger US dollar, President Trump's anti-immigration rhetoric, and the trade war with China.
According to a report by the National Association of Realtors, foreign buyers bought $77.9 billion worth of residential real estate from April 2018 to March 2019. That's a 36% decrease - down from $121 billion - from the year prior.
The report also shows that despite China being the biggest buyer of US residential real estate - purchasing 17% of all the properties sold to foreign buyers - the number of purchases made by Chinese buyers dropped 56% compared to the year prior.
Read more: 7 multimillion-dollar homes that have been sitting on the market for years
The luxury market in 2019 is a tale of many price cuts
Some of the country's major luxury markets - including Miami, Manhattan, and Los Angeles - are feeling the effects.
Business Insider's Hillary Hoffower summed up the status of the luxury market, writing, "NYC has a penthouse problem, LA has a mansion problem, and Miami has a condo problem."
Just consider Miami Beach, where high-end condo sales are on the decline. In the first quarter of 2019, there were 691 condo sales, down 24% compared to the first quarter of 2015.
And then there's the glut of mega-mansions in Los Angeles, many of which are getting massive price cuts. In January, Business Insider's Katie Warren reported that the LA mega-mansion dubbed "Billionaire," which was at one point the most expensive listing in the US, got a $100 million price chop.
Real-estate agents and developers in Los Angeles are so desperate to get mega-mansions off the market that they are throwing $100,000 parties in them and making Hollywood-style movie trailers for the homes to attract buyers.
But the desperation doesn't stop there. Over on the East Coast, too, brokers are slashing prices at high speed. In the first five months of 2018, Mansion Global reported that over half of Manhattan's luxury homes listed for $4 million and above were sold at discounted prices.