If you've ever wondered what happened to the housing recovery, it seems to have trickled upward. The market for luxury homes is booming, while the rest of the housing market seems to have stalled, as rising home prices, tougher mortgage rules, and low inventories putting the brakes on buying activity.

Things are looking up... and up
High-end properties are selling like hotcakes, according to Realtor.com, as told to The Wall Street Journal. As more buyers rush to snap up multi-million dollar properties, these gems are spending much less time on the market, as well. Often, the higher the price, the more quickly the property sells. 

The upward trend in home prices over the past two years appears to be slackening, and some analysts are calling the market overvalued. Many expect price gains to slow appreciably beginning next year, perhaps to the point where they do not rise at all.

Still houses are pricey these days, particularly in some areas of the country. The median price for a single-family house in San Diego County now sits at $510,000, up 6% from last August. In July, the median home price for the nine counties of the San Francisco Bay area was $617,000.

A boom in luxury condominium development in New York City has been pushing prices skyward, with parking spaces for the more expensive units topping $1 million. The median price of a city apartment reached $920,000 by the end of June.

In the Boston suburbs of Wellesley and Weston, only 10 out of 274 houses sold this year were purchased for $600,000 or less, while 21 were sold for $3 million or more.

High-end sales pick up, while affordable homes retreat
If you are getting the idea that the luxury market is on a roll, you are right. Real estate company Redfin took the pulse of the housing market recently, and found that the most expensive segment, categorized as prices of $375,000 or higher, are definitely higher now than they were just three years ago. Since 2011, the supply of luxury homes for sale has increased by 16.4%, while the most affordable sector – houses priced at or below $130,000 – decreased by 50%. Homes priced in between saw available inventory drop by 17%.

While homes sporting a price tag of a little over $375,000 may not seem overly expensive, Redfin's research certainly shows a trend toward an increasingly active market in pricier homes, compared with other housing segments.

Why the surge?
There are likely a few reasons why the luxury home market is gaining ground, not the least of which is money. The Federal Reserve's latest Survey of Consumer Finances (link opens a PDF) report notes that wealth recovery following the Great Recession has been uneven, at best.

The most recent triennial report shows that only the top 10% of U.S. households showed any income gains from 2010 to 2013, though not enough to make up for the losses incurred during the recession. Middle-class households, on the other hand, saw very little change at all – while those below the 40th percentile saw their average real incomes drop

New mortgage rules have probably taken a toll, as qualified mortgage rules take a more stringent look at applicant's ability to repay the loan. For high-end homes, however, buyers would most likely take out a jumbo loan, to which these QM rules don't apply. For many areas of the country, jumbos are written for amounts over $417,000; in tonier areas, the ceiling is $625,500.

There could be trouble ahead
Jumbos have some problem spots, however. While some are securitized, many are kept on the lending bank's books, and could cause trouble if values dropped and borrowers stopped paying. Also, many are interest-only for the first few years, which foreshadows a big jump in payments sometime down the road for homeowners. In addition, banks have been softening their stance on jumbo loans as of late, giving them out to prospects that don't entirely meet the institution's lending standards.

Could there be another mortgage blowout, at least for the jumbo loan segment? For a little context, remember what happened 10 years ago, when the luxury home market began to heat up in earnest. Real estate agents told CNN that rising home prices were sending more houses above the $1 million price point, and that wealthy people were ready to spend – and didn't worry about interest rates, or market fluctuations.

When tragedy struck, jumbo loans were among the first to show stress. There were a lot of them, too: nearly one-third of all mortgages written in 2007 were in this category. If home prices begin to lose traction again, we could have another jumbo problem on our hands. 

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