Homes costing $750,000 or more tough to sell

Selling a high-priced home in the Richmond area has never been easy, but it's become harder and taking longer.

The number of buyers who can purchase homes for $750,000 or more has always been small, said Laura Lafayette, chief executive officer of the Richmond Association of Realtors.

"In the past year, that select group of buyers has become even smaller. If you're a seller in this price range, the watch words must be 'extraordinary patience.'"

Year-to-date through June, the majority of home sales -- 80 percent -- in the Richmond region were for less than $300,000.

Homes for $750,000 or more represent slightly less than 1 percent of total sales, according to the local Realtors group.

Lafayette said the central Virginia market is comparable to the national market.

Nationally, at the current sales pace, it would take 40 months to sell all the homes on the market for $750,000 or more, according to the National Association of Realtors.

That's more than double the stock in mid-2007, before the credit crunch. By contrast, there is now less than a 10-month supply for all homes.

Sales of existing homes priced above $750,000 made up 2.3 percent of all sales in the first three months of this year, the national group said.

That's down from 4.4 percent of homes sold in 2007, before high-priced mortgages dried up.

"The high end is the worst-performing sector of the residential real estate market, unquestionably," said Bernard Baumohl, chief global economist of the Princeton, N.J.-based Economic Outlook Group.

The recession and collateral damage in the stock markets have knocked many luxury buyers out of the market.

Falling home prices coupled with new appraisal rules have scuttled deals.

Also, lenders have jacked up interest rates and down-payment levels for high-priced mortgages.

The government's Fannie Mae and Freddie Mac cannot purchase mortgages above $729,500.

That means any lender who makes a mortgage above that amount -- known as a jumbo loan -- will have to keep the loan on its books. To compensate for that risk, lenders charge higher interest rates.

To make up for falling home values, Erik Lebsack is throwing in his 2007 Mercedes Benz, worth about $80,000, with the sale of his four-bedroom home in Lithia, Fla. Appraised at $1.1 million in 2006, the home has been on the market since December for $779,777.

Lebsack said he never thought his house's value would plummet $300,000 in three years, and he still is surprised by the reluctance of buyers to meet his price.

"People either need to get the deal of the century or they feel they're getting ripped off if they don't steal the house," Lebsack said.

Staff writer Carol Hazard and The Associated Press contributed to this report.