What money doesn't buy: Luxury home market stalls

— -- In the affluent village of Bronxville, N.Y., where residents of million-dollar homes have an easy half-hour commute into Manhattan, selling a house has become a whole lot harder.

Larry Brocchini put his four-bedroom Colonial on the market in late May, with a price tag of $969,000. He and his wife, who want to move closer to their son's private school, have hosted open houses and showed the home by private appointment about 10 times, but they have yet to receive a bid.

The pool of potential buyers looking to escape crowds and crowded schools of Manhattan is also having trouble selling their apartments and co-ops. In the Big Apple, the median sales price for an apartment priced in the top 10% of the market fell as much as 26% in the second quarter and the number of sales were cut in half from the year-ago period, data last week showed.

"People are just being a little more deliberative than they have been in the past," said Brocchini, a 44-year-old attorney.

In fact, high-priced homes are languishing on the market. Nationally, at the current sales pace, there's about a 40-month supply of 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% of all sales in the first three months of this year, the Realtors' group said. That's down from 4.4% 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 many deals. And lenders have jacked up interest rates and down payment levels for high-priced mortgages.