For nearly two months, through the heart of the spring buying season, the Institute for Luxury Home Marketing’s Market Action Index has stayed stuck at 29, one point below the official level designating a seller’s market.
Meanwhile lower priced homes have risen. The national median price on Realtor.com for all price tiers is up 2.63 percent in April over March and other listing-based market reports registered similar gains as slim inventories and a robust buying season combined to fuel the recovery. While the average price for ILHM’s market profile has risen to $1,266,086 through May 16, it’s only 1.6 percent above the ILHM average at the end of March.
Compared to lower price tiers, luxury demand is much weaker. Inventories in ILHM’s profile have increased 7.3 percent since the end of March, typical for this time of year and in line with monthly increases in the overall national inventory. However, time on market, which measures the balance between supply and demand, has been stuck on neutral like ILHM’s market index. The average days on market for luxury homes is 184 days, unchanged in six weeks. The median age of inventory on Realtor.com, however, was 81 days at the end of April, down 2.41 percent from March.
However, in the hottest markets in the nation, luxury sales have been doing as well as lower priced homes. In Denver, one of the best markets in the nation for all price tiers, luxury home sales skyrocketed in April, with sales of homes priced at $1 million or more rising almost 142 percent from April 2012, according to independent broker Gary Bauer. For luxury homes priced at $1 million or more, there were 87 single-family home sales in April, a 141.7 percent jump from the 36 in April 2012, according to the report based on Metrolist data.
Luxury home values increased in San Francisco, Los Angeles and San Diego in the first quarter of 2013 compared to a year ago, according to the First Republic Prestige Home Index by First Republic Bank. San Francisco Bay Area values jumped 8.7 percent from the first quarter of 2012 and 3.2 percent from the fourth quarter of 2012. The average luxury home in San Francisco is $2.82 million. Los Angeles area values rose 7.1 percent from the first quarter a year ago and 1.9 percent from the fourth quarter of 2012. The average luxury home in Los Angeles is $2.1 million.
In Silicon Valley, the market remained very active. “Demand for luxury homes is solid, but there is also more inventory,” said Monica Corman of Alain Pinel in Menlo Park. “Menlo Park and Palo Alto continue to be very strong, especially old Palo Alto.”
In Las Vegas there were 85 sales of million-dollar homes in the three months ending March 31, up from 39 deals in the same period last year, according to a report this week from Redfin. The homes sold for at least $1 million each. If sales continue at this pace, 2013 will be the best year by volume for Southern Nevada’s high-end housing market since the economy bottomed out.
But demand is not as strong everywhere, like the Hamptons. “In general what’s different this season,” said Harald Grant, a senior vice president of Sotheby’s International Realty quoted in the New York Times, “is that in the mind of most buyers, less is more, and nobody wants to be the king of the hill and flaunt their wealth the way people were doing before the recession.
“Folks who spent $20,000 for a month’s rental,” he continued, “may be looking to spend $15,000. Folks who could be driving a Rolls-Royce are settling for a Mercedes. People aren’t saying, ‘I have to have it; I’ll pay anything,’ and writing checks on the spot. An owner who says, ‘I want $32 million for my oceanfront house’ probably isn’t going to get it. He’ll get somewhere in the mid-20s,” said Grant.
In Nashville 21 luxury homes sold in April for an average price of $1,434,255. The average days on market for sold homes is now 140 days, compared to the median age of inventory of 56 days. Some 430 million dollar homes are still listed in Nashville.