Mortgage limits hit luxury home market hard in California

The million-dollar home became something of a rare bird in California last year, a victim of the continuing collapse in the housing market.

California saw a 42.5 percent drop in home sales at $1 million or above last year, according to a report Tuesday by market researcher MDA DataQuick.

A total of 24,436 homes sold in California last year for $1 million or more, DataQuick said. That was the lowest since 2003.

The dropoff was slightly worse in the Sacramento area: 50 percent in Sacramento County and 45 percent in Placer. A total of 442 homes sold for at least $1 million in El Dorado, Placer, Sacramento and Yolo counties last year, more than half in Placer.

Luxury sales sputtered even as the low end of the market, nursing on cheap foreclosed properties, showed signs of life. The high end was battered by the downward price pressure at all levels of the market and was hit by a severe shortage of financing, said DataQuick analyst Andrew LePage.

Those buyers are locked out of most mortgage assistance programs like Fannie Mae, which cap loan limits at $474,950 in greater Sacramento. As a result, they are charged higher interest rates and often have to make down payments of 30 percent or more, LePage said.

"Anything for the upper-end market, there's no financing," said Scott Johnson of Pipeline Capital Group, a mortgage broker in Granite Bay. "You're effectively looking for a cash buyer."

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