Though inventory shortages began at the lower price tiers, tight inventories have worked their way up to the luxury levels in the past two quarters. Expensive homes are selling faster than they were a year ago but third quarter prices are down in many markets compared to a year ago.
The median luxury property is taking nearly 200 days to sell this week, far above the 5.4-month supply for all price ranges. However, this is the time of year when inventories traditionally increase, especially in the upper price tiers. Last year in December, the Institute for Luxury Home Marketing reported that homes in its market profile were spending an average of 231 days on market and luxury properties in all markets it tracks were averaging 215 days on market at the end of the year, a year-long high.
During the spring buying season, luxury homes were selling much faster. Days on market for luxury homes fell to 120 days, down from 155 days at the outset of the buying season in February.
Luxury agents and brokers around the country report brisk activity up to the onset of the holiday season, an indication that demand is strong. Tighter inventories are not translating into higher prices at the million dollar plus end of the spectrum, however.
In the Hamptons, Town and Country Realty reports the greatest gain in third quarter activity was in the $3.5 million to $4.99 million price range and the only price range to see a statistical decline was the $5 million to $9.9 million range. Total number of sales in the Hamptons was up 17 percent.
Luxury home sales in the Denver metro area almost doubled in October compared to October 2011, according to John Rebchook of Inside Real Estate News, citing a report by Coldwell Banker Residential Brokerage. However, the median sale price $1.31 million of a luxury home closed last month in the Denver market was off 4.8 percent from October 2011 and 3.9 percent from September. Homes also sold at a much faster pace year over year and sellers on average received a higher percentage of their asking price.
In Lake Tahoe, homes under and over the million-dollar mark both experienced significant increases in sales (37 and 33 percent, respectively) while overall prices fell around the lake. The median price of a home in Lake Tahoe is $330,000 (down 11 percent) and the average price is $538,289 (down 15 percent), according to Chase international.
Overall there was a 49 percent quarter-over-quarter and 39 percent year-over-year improvement in Lake Tahoe-area home sales, according to Better Homes and Gardens Mason-McDuffie Real Estate. In the third quarter, 122 homes changed hands, up from 82 homes sold in the second quarter and 88 homes sold in last year’s third quarter. In another sign the market is recovering, the average number of days a home was on the market before attracting a contract to purchase declined from 162 days a year ago to 101 days in this year’s third quarter.
In the greater Truckee area, the median price of a single-family detached home declined slightly from $451,129 in the second quarter to $450,083 in the third quarter, although it was up 3 percent from $437,261 in the third quarter of last year as the local real estate market continued to show signs of a recovery. Locally, a change in the mix of homes sold boosted the median sales price in Donner Lake by 50 percent year over year while low inventory pushed sales prices slightly higher in the Town of Truckee (+12% for the quarter and +7% for the year) and the Glenshire Area (+4 percent for the quarter and +3% compared with a year ago).
In Atlanta, while most of the real estate market is enjoying a nice rebound this year, luxury real estate is going backward. Sales of $2 million-plus single family detached resale homes are down 33 percent from 2011 (33 sales in 2012 vs. 49 during first 10 months of 2011) while sales of $3 million plus homes are down 67 percent (5 sales in 2012 vs. 15 in 2011). The average sales price for $2 million-plus homes is down 11 percent from 2011, while the average for $3 million-plus is up 1 percent. There are 112 single family detached new and resale homes in Buckhead currently on the market that are priced more than $2 million, which translates at the current rate of sale to a nearly four-year supply, according to Beacham and Company Realtors.
New York City is suffering from an acute lack of inventory throughout the sales marketplace, according to Warburg Realty. Foreign money is snapping up the high and mid-priced condominiums all over Manhattan. But the profound shortage of inventory which has developed in the co-op market defies expectations. Throughout the city, resident New Yorkers are hamstrung month after month in their new home searches. At $20 million, at $10 million, at $5 million, at $1 million - few new listings appear. The customers, hoping that there is still seasonality in the market ask, “Won’t there be a lot more inventory hitting the market in September?” Sadly, the answer was no. Many of these customers asked the same questions in April. There was no major spike in inventory in the spring and not much more in the fall. And we don’t anticipate one any time soon, at least not on the resale side, not even with the almost certain increase in the capital gains tax burden for sellers looming on the 2013 horizon.