It’s still a buyer’s market for properties selling for more than half a million as tight inventories driven by negative equity and slow foreclosure processing and rising prices are having much less impact on luxury homes than on less expensive homes.
According to the Institute for Luxury Home Marketing’s weekly market report, the average days on market was 186 for luxury homes. Inventories for the luxury segment are about the same as they were in November. Median prices in the 31 markets that ILHM tracks have stayed fairly stable. Days on market range from a low of 111 days in Silicon Valley to 268 in New York.
By contrast, the national median age of all homes in the June Realtor.com inventory dropped to 84 days in June, down -9.67 percent on an annual basis. The size of Realtor.com’s inventory of homes for sale was 19.35 percent below a year ago. Prices are up 2.68 percent on a year-over-year basis, according to the Realtor.com Trend Data released today. Of 146 markets covered by Realtor.com, while list prices increased in 101 markets, held steady in 26 markets, and declined in just 19 markets. (see Prices Rose 2.68 Percent in June).
Several factors are causing the inventory drawn down among lower price properties. Negative equity is keeping many potential sellers out of the market, which keeps a lid on inventory and complied with the reduced flow of REO properties has led to much tighter market conditions for lower priced properties, particularly in the hardest hit markets, according to CoreLogic Economist Sam Khater. Khater estimates that lower tier properties are appreciating three times faster than expensive homes as a result of tighter inventories. (See Less Expensive Homes Appreciate Three Times Faster)
Luxury brokers around the nation report little change in their markets in recent months, unlike the tight inventories and rising prices among entry-level homes found in almost market in the country.
In Denver, the 204 days is the average time on market for luxury properties today. The average reflects five sales that remained on the market for over a year. One home that was new construction in Lone Tree was on the market for 1458 days., reports broker Joan Cox.
Silicon Valley is the tightest luxury market in the nation, averaging 98 days on market during the 12 months endng July 1, according to John Souerbry of Luxury Homes and Land.
In Seattle, the luxury home market has actually shifted from a sellers’ market in January of 2012 to a strong buyers’ market. The average market time for home sales was at its lowest in September 2011 250 days, reaching the high-water mark of 366 days in April of 2012 and since has steadily been trending downward reports Adrian Willanger of Coldwell Banker Greater Seattle.
In Fort Collins the luxury market is doing better than most. Average days to get an offer for the homes that sold has been 133 days, with an average days on the market of 167. This year, 39 homes sold for an average of 96.1 percent of listing price.
Suffolk County Long Island is experiencing an average days on the market for luxury homes at 186 days. These closed and sold luxury homes from $1,000,000 and up ranged in price from $1,100,000 for a 5 bedroom 4 bath Contemporary in Westhampton to $3,500,000 for a 4 bedroom 3.5 bath Post Modern Style House in Westhampton. Nearby Nassau County is virtually the same, at 183 days.
In Cary, NC the current months of supply is the lowest level since 2007 and is a return to the historical norm for the segment. The lowest supply based on 2011 closings is found in Cary/Morrisville/Apex , according to Tracy Santrock.
In Solon, Ohio luxury sales are up slightly, from 13 to 15 and 11 more luxury homes currently under contract, which means that Solon luxury sales will be at least 26 even if no more luxury homes sell the rest of the year. Solon sold 29 luxury home sales in all of 2011. The average days on the market for a luxury home in Solon has drastically decreased, from 224 days in 2011 to only 168 so far this year.
In Phoenix, properties have been on the market for an average of 199 days. In Scottsdale the number of homes on the market in this price point continues to decline. There was an 11 percent drop in inventory between May and June and pending home sales saw a pretty sharp drop in June.