Luxury home market looks especially soft

There are some signs of life in the housing market, with many of the hardest hit regions showing strong sales growth in terms of volume even as home prices fall.

But at the high-end, things are still looking pretty dismal. Average days on market for high-end homes has been soaring and that's generally looked at as a sign of excess inventory and limited demand. Expensive markets like Manhattan held up really well in the early part of the downturn but they're now showing signs of weakening.

It's not at all surprising that the luxury home market is entering the toilet and there are a number of reasons that it could stay dismal for quite some time. Here are a few of them:

• The first-time home buyer tax credit that is helping to drive the increase in home sales and the shrinking of inventory only helps first-time buyers who tend not to buy expensive homes.
• The market for jumbo mortgages is tigher than the market for conventional loans, meaning that high-end home buyers are not benefiting from low interest rates to the extent that lower-end consumers are.
• The stock market beating has had a much larger impact on high net worth individuals, many of whom have lost close to half of their personal fortunes. In that sense, the economic downturn has had a much more severe impact on the rich. If you're a minimum wage worker with no savings or investments and you haven't lost your job, your financial situation is really not any worse off because of the recession. In fact, low energy prices are helping you.
• If you're net worth has fallen from $20 million to $12 million, you're still in great shape: But psychologically, you're less likely to want to go splurge on a new home.

For all those reasons, the luxury housing market is lagging behind the rest of the market -- quite a feat given how awful the market is overall. It doesn't seem likely to turn around too quickly either.