Luxury Homes Are Lingering on the Market

Business Week reports:

The action this spring home-buying season isn't unfolding in prestigious Manhattan or Beverly Hills, but in a middle-class neighborhood near you.

The global economic meltdown has put a freeze on sales of mansions and penthouse condos, which held strong through years of tight credit, foreclosures, and plummeting prices in lower-cost markets. These days, sales of lower-priced houses are accelerating as first-time home buyers and investors take advantage of bargain prices, low interest rates, and government incentives.

One thing hurting the luxury market is that jumbo mortgages—typically those larger than the conforming limit of $417,000—have higher interest rates and are tough to get, requiring pristine credit, six or more months of reserves, and full documentation. The deteriorating economy also makes it difficult to justify making a discretionary purchase of more than $1 million, especially with so much uncertainty in the job market.

You might say the bottom isn't in,in the world of high priced real estate.