Home sales have been declining since last fall and in some cases steeply, with memories of bidding wars early last year triggering wistful sighs. The sales decline continued into the summer, and indications are that they’re dragging into September as well. But the median sale price continued to rise, if at a slower rate, and in many areas has moved out of reach for the median-income household.

Unsold inventories are rising. This has hit new homes the hardest. Otherwise exuberant homebuilders – they’re licking their chops about the sky-high asking prices – are complaining about foot traffic just as inventories have reached 6 months’ supply [Drowning in Unsold New Homes?].

Home sellers have gotten nervous, and 24% of them across the country lowered their listing prices in July to entice potential buyers to show up. And home flippers are finding their business model – buy low and sell high – under pressure [Home-Flipping Collapses in San Francisco, Losses Spread ].

But hey – no worries at the upper end. In the luxury housing market, it has always been a long drawn-out process to sell a home. There aren’t that many people around with the means to buy these properties, and sellers usually aren’t that desperate and don’t have to sell and thus can hang on to their homes for years. In that rarefied air, the housing market is booming, and the time it takes for a luxury home to sell is dropping.

The median age of inventory of homes above $1 million has dropped for all price categories from July 2012 to July 2014, The Wall Street Journal reported. In the $1 million to $1.9 million range, the median age of inventory dropped from 132 days to 98 days over the two-year period. Further up, in the $7 million to $7.9 million range, it dropped from 179 days to 142 days. In the $25 million to $29.9 million range, it dropped from 222 days to 180 days. They’re practically selling like hotcakes. At the very top, at $30 million and above, the median age of inventory is now down to just 139 days.

The change has been dramatic in Vail, Colo., where it was common for homes above $15 million to linger on the market for more than two years. Now they’re “trading in months, not years, and sometimes in weeks,” said Tye Stockton, an agent with Ascent Sotheby’s International Realty, pointing to a home listed at $19.9 million that went into contract in under 45 days. Like many, Mr. Stockton attributed the change to the uptick in the stock market as well as the improving economy. Not only are these houses moving fast; many are commanding near-record prices a square foot, he added.

These folks no longer dilly-dally around:

In Greenwich, Conn., Tamar Lurie with Coldwell Banker is expecting about 20 sales above $10 million this year, which is roughly twice the number sold last year. In July, she was one of two agents who sold the Armonk, N.Y., home of Ron Howard for $27.5 million. Ms. Lurie said they had an accepted offer in the first week, and the house sold at asking price in less than three months.

The luxury market is sizzling across the country, even as the rest of the housing market is teetering. The foundation of the housing market, first-time buyers, is crumbling. The primary force behind the soaring prices since late 2011 have been private equity firms and other big investors. They plowed the endless and nearly free money from Wall Street into key housing markets, ratcheting up prices with every wave. Now their business model has tripped over the impact of soaring prices on renting those homes to the strung-out American middle class. And they’re backing off.

But the luxury market has been fired up by the stock market (and other asset bubbles), as real estate agents pointed out. The Fed should be proud. In the luxury market, monetary policy truly morphed into the “wealth effect” that then has performed miracles.

And this is precisely what has happened, after nearly six years of ZIRP and $3.5 trillion of QE. But it didn’t happen in the broader economy. It was concentrated on a tiny sliver at the very top. The wealthier the people, the more they benefited. A working stiff with $40,000 in his retirement fund might have made $60,000 after fees since the market bottom – if he didn’t sell at the bottom. A billionaire might have made a couple of billion dollars.

But most Americans don’t own stocks and didn’t benefit at all. Savers were eviscerated. People living off well-planned, prudent fixed-income strategies suddenly found their future go up into the wealth effect destined for others – who’re now splurging on luxury homes.

But at the rest of the market, where homes have once again moved out of reach for many Americans, something has to give. And it’s not going to be the maxed-out middle class. Read…. But Who the Heck Is Going to Buy all these ‘Overpriced’ Homes?

Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.