​Where home prices are suffering: luxury sales

If there’s a place homeowners want to be these days, it’s in solidly middle-class houses.

That’s because the high end of the real estate market — home that sell in the top 5 percent of all property prices — have hit a dead zone with pricing, according to data from real estate data provider Redfin Corp. The country’s most expensive properties saw no price appreciation last year, while the bottom 95 percent of U.S. homes gained 4.9 percent in sale price.

The problem? Blame China, where economic growth is slowing, as well as the strength of the U.S. dollar, which is making it more expensive for foreign buyers to snap up American properties. It’s not only the U.S. that’s getting hit by the trend, given that the average prices of luxury homes in 10 global cities are expected to rise at roughly half the rate as in 2015.

A top-end property — those whose average sale prices place it within the top 5 percent of all sales — held steady at $1.07 million last year, according to Redfin data.

On the other hand, the bottom 95 percent of U.S. homes saw sale the average sale price lift to $316,901, Redfin said.

The divergence comes as home prices overall are regaining lost ground from the housing crisis. Several cities have either reached or exceeded the home prices last seen during the July 2006 housing peak, including Dallas, Denver, San Francisco and Portland, Oregon, according to the Standard Poor’s/Case-Shiller 20-city home price index.

While the growing fortunes of America’s wealthiest 1 percent has helped lift home sales during the past few years, rich overseas buyers have also flooded into the market. Wealthy foreign consumers bought $104 billion in U.S. real estate between April 2014 and March 2015, the National Association of Realtors said last year. That represented a 13 percent jump from the prior 12-month period.

The Chinese made up the biggest group of buyers, investing almost $29 billion in U.S. real estate during that period, the NAR said. The Chinese tended to buy in relatively expensive states like California and New York, it added.

The slowing Chinese economy and the stronger dollar is already having an impact on some markets, with inventory for San Francisco houses listed for $2 million or more jumping to a record, Bloomberg News reported.

The good news, for wealthy buyers, is that they’ll likely have more bargaining power in real estate negotiations. For the rest of America, however, prices are becoming only more competitive.