There are several factors behind the price drops. The high end of the market didn’t fall as much or as early as the broader market, since there weren’t as many distressed sellers that were forced to sell. Those wealthier sellers have hung on to their properties, waiting for prices to approach 2008 levels.
Now that they see that the prices of 2008 aren’t likely to return anytime soon, many are deciding to drop their prices just to get a deal. The increase in sales has itself spurred sales, as wealthy sellers see a larger number homes in their neighborhoods trading at lower prices.
“There is now a critical mass of data so sellers can say, ‘Well, this is the new reality,’” Boomsma said.
Here in Greenwich it’s perfectly obvious what is selling in the high end of the market and what is not. So far this year 9-10 home owners in the $5-$9 range have accepted the new reality and gotten out – 163 owners are waiting for the return of 2006.