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Luxury market ready to switch to sellers

By REAL ESTATE ECONOMY WATCH   |   April 2, 2013 at 5:23 PM   |   Comments

The Institute for Luxury Home Marketing weekly market report today found that homes priced over $500,000 have reached a market action index of 29, one point below the level that typically indicates a sellers’ market because demand is high enough to quickly consume available supply.

The national median price in the ILHMI profile is $1,246,587 for an average asking price of $339 per square foot. The average days on market is 185 and falling. Some 23 percent of the luxury properties in the profile have had some sort of a price decrease while they have been listed, and 14 percent have been relisted.

Every one of ILHM’s 30 markets reports improving conditions. Shortest times on market were reported in Washington (135), Silicon Valley (139), San Francisco (148), Las Vegas (156), San Diego (165), Housont, (170), Austin (178), Atlanta (179), Boston (135) and Ventura (189).

Reports from markets around the nation confirm that sales are strong and inventories are getting tighter in the luxury sector. In the Denver area, buyers purchased up almost 37 percent more luxury single-family homes in February than they did in February 2012, according to a report by independent broker Gary Bauer. Bauer’s report, based on Metrolist data, showed that well-heeled consumers purchased 41 homes that cost at least $1 million last month, compared with 30 in February 2012. In January, 39 luxury homes sold, reported Inside Real Estate News.

The total dollar volume for luxury sales in February rose 30 percent to $57.5 million, compared with $44.25 million a year earlier. The dollar volume last month was up slightly from the $55.7 million in January.

“What is driving the luxury market is what is driving the entire market,” Bauer said. “Consumer confidence is up and people think now is the time to be putting their money into housing. I expect a

In Atlanta, the fourth quarter of 2012 marked the third consecutive increase in median sales prices and, in fact, the largest - at 26.3 percent over the same quarter the previous year. In early 2013, the market for luxury homes is showing dramatic improvement in virtually all categories. Last year finished with approximately 15 months of inventory available in the luxury market, which is half of what it was at the end of 2011 and sale to list price ratios are steadily improving for sellers. And every percentage of improvement equates to tens of thousands of dollars.

Pricing strategies remain an important part of selling a luxury home. Luxury homes that hit the market at the right price and in the right condition sold in 38 days, as opposed to taking nearly one year for properties whose prices chased the market to the right price over time.

Chicago luxury properties sales were up and inventories down in the fourth quarter, according to the Downtown Chicago Realtor.

The number of listed Chicago homes for sale priced $3 million or higher in the 4th quarter was down 5.3 percent from the fourth quarter 2011. There were 126 Chicago ultra-luxury homes for sale compared with 133 a year earlier.

The number of Chicago ultra-luxury homes sold in the 4th quarter was up 18.2 percent from a year earlier. There were 13 such sales. This was a change from the 3rd quarter when sales were down 18.8 percent from a year earlier. Chicago ultra-luxury home pending sales were up 36.4 percent. This is also a change from the 3rd quarter when pending sales were down 30.8 percent.

In Seattle, inventory in King County is approximately half of what it was from a year ago and this combined with low interest rates is causing homes to sell quickly and at prices much higher than the market low at the beginning of 2012. Buyers are often finding themselves in bidding wars and paying over the asking price in many cases. This is good news for sellers who have been waiting to sell their homes, but sellers may also need a dose of caution.

In the Ballard/Green Lake area there have been 288 single family homes (not including condos) that have sold in the last 90 days. Of those an astounding 122 homes have sold within a week at an average of 12 percent above asking price and none of those sellers had to reduce their price to get an offer. Seventy-one homes sold in more than 7 days but less than a month at an average of 98% of asking price and 21 percent of those sellers had to reduce their list price before someone made an offer on their home. 95 homes sold after more than a month on the market at an average of 95 percent of the original asking price with nearly 70 percent of those sellers having to reduce their price before the first buyer made an offer. While these results vary from neighborhood and price range, the general trend can be seen throughout the Seattle real estate marketplace.

© 2013 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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