Often heralded as a fortress of strength in a weak housing market, upper-end home prices in North County's posh neighborhoods have started to show some cracks.

North County homeowners selling $1 million homes are now more likely to drop prices than they were a year ago. The gap between the original asking price and the final sales price has grown by 25 percent when compared with similar-priced homes during the same time a year ago, according to data from Sandicor, a service that tracks San Diego home listings.

An increased willingness to lower prices on expensive homes appears to be the result of high inventories.

In Rancho Santa Fe, mostly composed of custom homes with price tags above $2 million, it would take about 20 months to sell off all the active listings, based on three-month averages of listings and sales.

Several housing analysts have said higher-end neighborhoods tend to host more homeowners with deep pockets, a cause for strength in home prices despite a dearth of buyers. They argue: If homeowners want to sell a second home but do not need to, then they can wait for the housing market to recover and get the price they want.

But the law of supply and demand appears to have started to take its toll on some well-heeled borrowers who need to move from their primary residence.

"Sure, if it's a second home and you don't need to move, absolutely, you should wait it out," said Kris Berg, a real estate agent who specializes in Scripps Ranch, a high-end neighborhood near Poway. "But if a move is in your future in the next three to five years, then yesterday was the best day to sell. And tomorrow will be a little worse than today."

After holding fairly steady in prices while less expensive home prices plummeted, the high-end market is starting to feel the downturn, according to Standard & Poor's Case-Shiller Home Price Index. Considered by some as the most accurate price indicator because it compares the cost of homes with its previous sales price, the index's most recent data is January.

In the Case-Shiller data, San Diego County's upper-end homes, defined as those priced more than $629,470, had maintained a year-over-year decline of about 5 percent or less through September while the rest of the market took double-digit percent declines.

Then the upper-end homes started to take its lumps as well, with prices dropping 6.5 percent in just three months.

And when February Case-Shiller data comes out next week, listings data indicate the high-end market could show another large decline.

"I think people are just getting scared," said Diana Williams, a real estate agent who specializes in Del Mar and Rancho Santa Fe. "They will set the house at a lower price so they can be sure they're going to get rid of it."

Further, the percentage of homes that sold at more than 20 percent below the original asking price has grown by 46 percent.

Discounts on high-end homes are not just hitting Rancho Santa Fe, which is farther inland than North County's vaunted coastal communities.

Many homes in Del Mar and Carlsbad have sold for 20 percent under the original asking price, with several sellers willing to let their homes go for $1 million or more below the asking price. For example, one Del Mar home sold for $2.5 million after originally posting a $4.7 million list price.

Houses sold are also down, falling to 250 $1 million-plus homes sold so far this year, down from 409 homes for the same time period a year ago.

And the number of active listings for upper-end homes remains high: There are 1,224 $1 million-and-up homes for sale in North County. With just 222 first-quarter sales in that sector, it would take 16 months to sell off all North County high-end homes based on current sales rates.

For the general housing market, it would take 12 months to sell all active North County listings.

Williams and other agents stress that the decline in prices for high-end homes represents a small portion of the upper-end market. And most of the price declines Williams has seen come from homes priced between $750,000 and $1.5 million ---- not in homes more than $2 million.

She said borrowers with houses under $1.5 million are more likely to have negative-amortizing loans, mortgages where borrowers can pay less than the accumulated interest, meaning the amount they owe each month grows.

Once the products hit a certain level, such as 15 percent above the home's value, they reset to fully amortizing loans, forcing the borrower to pay off interest and some principal each month. The reset often doubles the mortgage payment.

Fear of running into that reset has caused some high-end homeowners to dump their second homes before payments jump, Williams said.

Therefore, while foreclosures are still rare in the high-end market, the downturn in the overall housing market appears to have created some downward pressure on prices there as well. In a stable housing market, well-heeled borrowers probably would have been able to refinance out of the negative-amortizing loans before they reset.

But without the glut of foreclosures that have plagued Escondido and Oceanside, price declines in places such as Rancho Santa Fe and Del Mar will probably remain more mild, analysts said.

Still, oversupply and just a sprinkling of buyers in certain high-end neighborhoods mean those who have to sell will need to lower the price.

"There are some on the market six, seven, eight months with no sale. Others are selling in a week. It's kind of a hit-and-miss product on the high end," said Lyle Anderson, a real estate agent in Poway. "It's not a foregone conclusion that just because you have a big, fancy home with a big, fancy price tag that it's going to sell right away."

By : ZACH FOX