A big factor in the reduction in higher-end property sales is the increased cost and difficulty in obtaining jumbo loans -- loans in excess of $417,000. Rates on jumbo loans have recently been between two percent and three percent higher than loans under $417,000. Including a 20 percent down payment, a jumbo loan would be required for a home selling for about $521,000 or above.  With that in mind, I looked at sales above and below the price of $521,000.

 As the table below shows, there was indeed a significant drop in sales over $521,000 between 2007 and 2008, and a larger drop in Q4 of 2008. This is even the case in upscale Bainbridge Island. A reduced level of upper-end sales is likely to continue until jumbo loans become more affordably available.

Portion of Total Sales Greater Than $521K