It's typical for sellers to lower the asking price of their home if it's been sitting on the market for a while. But the super-rich have a different way of dealing with a house that won't sell: Ask for more money.
Amid a tenuous housing recovery, owners of luxury homes are trying to speed up the sale of their homes by raising the asking prices, The Wall Street Journal reports. In the New York Metropolitan area, for example, some 436 properties listed for more than $1 million have had their prices raised in the last year, up from 266 two years ago, according to data from online housing tracker Zillow.com cited by the WSJ.
But while experts point to some signs the housing market is improving, the price hikes aren't likely the result of market forces. Instead, they're probably psychologically driven. Raising the price of a luxury property can give it more attention on the global market, some real estate agents told the WSJ. Meanwhile, unique properties such as those with a connection to a particular architect, artist or celebrity can also sell for more, The New York Times reports.
Some argue that these psychological impressions don't mean the luxury housing market is actually improving. They've certainly got a ways to go; think of the former Goldman Sachs partner who recently bought an apartment in New York’s prestigious 740 Park Ave apartment building for almost half the original asking price. Some housing experts say that analysts have been overstating the strength of the housing recovery and therefore artificially driving up prices, CNBC reports.
But the wealthy have been known to find ways of making the best out of a poor home situation. As the bust of the housing market depleted the value of many homes worth more than $1 million, many wealthy homeowners elected to enter foreclosure to save money, a practice known as strategic default. Poor homeowners by contrast often ended up draining resources by making monthly payments toward a mortgage that had become worth more than the property itself.