$10+ million home sales are through the roof

Plus, smart tips for how to price a home

A peek at one of our ultra-luxury listings

It’s no secret that if you’re working at the top of the luxury market – homes selling for $10 million and up – that is a great place to be. And that’s certainly truer than ever. In our second story, we show you why that segment of the market is on fire. 

We are so lucky to work in this area of the market. The homes are truly incredible. 

If you want to see one of our current ultra-luxury listings on Homes.com, click here to check it out. It is an absolute STUNNER located right in Beverly Hills. 6 beds, 9 baths, 11,925 sq. ft., priced at $22,995,000. 

If you’re wondering why we’re driving our property traffic to Homes.com, it’s because we are big fans of their business model. All leads come to agents directly, and we think that is a terrific step forward for our industry.

Also, if you’re curious how we set prices for all our homes, including the one above, scroll down to today’s Foundation Plans. Today, we are presenting the first part of our three-part series with tips on how to price a home. This skill separates the amateurs from the pros, so we want to help you master it, especially as we prepare for the upcoming rate cuts.

- James and David

Small progress on existing home sales

Golden Gate Bridge during Golden Hour

Source: Unsplash

Based on preliminary data, existing home sales for August are expected to have increased by 0.5% from July and decrease by 9.5% year-over-year. That’s according to First American’s August update of its Existing-Home Sales Outlook Report. Here are some other key points:

  • The largest factors behind the change are increased house-buying power (+0.4%), an easing of the rate lock-in effect (+0.4%), and a strong economy (+0.3%).

  • Median-income households got a $13K boost in home buying power

  • Home-buying power is nearly 4% greater than last month, and 10% above a year ago. However, it remains 7% below the two-year, pre-pandemic average based on 2018 and 2019 stats.

  • Even if mortgage rates dip to 6%, fewer than 30% of renters nationally could afford the median-priced home

Our take

We like this report because it’s a good balance of optimism and realism. First American is basically saying that if mortgage rates continue to ease throughout the rest of the year, we’ll see only incremental improvement in the existing home market. Yes, mortgage rate cuts will get some buyers off the sidelines and entice more sellers to part with their super-low mortgage rates, but as you can see above, even if rates dip below 6%, fewer than 30% of renters could afford the median-priced home. Also, the bulk of existing homeowners will still be rate-locked in. But we don’t want to throw too much cold water on this report. The uptick in existing home sales signals clear progress.

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Luxury home sales spiked in Q2

Source: realtor.com

In Q2, sales of homes priced at $10 million or more went through the roof, with Palm Beach leading the way with a 44% increase in sales. That’s according to a new update from real estate firm Knight Frank. Here’s what else they report: 

  • Globally: 

    • Buyers acquired 463 super-prime ($10M+) homes in Q2 

    • Year-to-date total annual sales equal $33.4 billion, up from $20.1 billion in 2019

    • Dubai is the standout growth market, with sales of $10M+ properties jumping from 23 in 2019 to 436 in the most recent 12-month period

    • The number of ultra-high-net-worth individuals globally has gone up 19% over the past five years

  • In the US:

    • The number of ultra-high-net-worth individuals increased by 8% in 2023

    • New York had 72 sales over $10 million in Q2, its highest total in two years. Miami followed suit with 55 big-ticket sales, while Palm Beach had 36.

    • While Los Angeles had 42 sales, they were down 29%, year-over-year, thanks to the new “mansion tax” that was implemented on April 1, 2023. It slaps a 5.5% charge on properties selling for more than $10 million.

Our take

Anyone interested in the luxury market needs to read this report. It shows that, while there may have been some cooling in certain price segments below $10M, ultra-wealthy buyers are still willing to shell out record prices for high-end properties. Clearly, this is great news for brokers specializing in this area. Even though most of these cash-flush buyers aren’t borrowing to buy, falling interest rates worldwide could bolster sales in the coming months. If last week’s record 29 contracts signed for $4 million-plus properties in Manhattan is any sign, the luxury market could be poised for a hot end to the year. Moreover, transaction volume is likely to pick up even more through 2025.

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Your Listing, Your Lead

Over 100 Million buyers uses Homes.com, the fastest growing home search site. Put your best profile forward with a Homes Pro membership—amplifying your real estate brand with premium tools, priority visibility, and enhanced exposure across the internet with Homes.com.

Share of mortgage-free homes hits a new high

Source: Unsplash

39.8% of U.S. owner-occupied housing units are now mortgage-free, up from 38.5% in 2022, marking a new high since records have been kept. The portion of homeowners with no mortgage has ticked up almost every year since 2010, when it was 32.1%. All these stats are from Resiclub’s analysis of new data from the U.S. Census Bureau's American Community Survey. 

Among the 200 largest U.S. metros by population, here are the top 5 highest and lowest percentage of mortgage-free homeowners:

Highest %

Lowest %

Our take

Age is one of the key factors driving the rise in mortgage-free homeownership. As Americans live longer, and the massive baby boomer generation ages into their senior years, the U.S. population has skewed older. Since older homeowners are more likely to have paid off their mortgages, large numbers of homeowners are achieving mortgage-free status each year. Another factor: many buyers are avoiding mortgage debt by using the equity from selling their home to purchase their next home outright. As we’ve noted, more than 33.5% of U.S. home purchases in Q4 2023 were all-cash. We’ll be keeping a close on this trend to see if it changes in 2025 as mortgages are set to drop.

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Schematics

The news that just missed the cut

Source: Unsplash

Foundation Plans

Advice from James and David to win the day

After the interest rate cuts, there will be more opportunities for agents on both the seller and buyer side. It will be very important how you price new listings. It’s one of the most important skills the pros know. Not everything in your market has the same pricing trends; it requires a case-by-case analysis. We want to be as comprehensive as we can, so throughout the next three editions, we will be addressing each of the three steps – (1) Understanding the property details of your listing, (2) Gathering the relevant sale comps, and (3) Devising a smart pricing strategy –  that are needed to price your listing properly and effectively. Today we’re addressing the first step: understanding your subject property. 

1. Understand Your Listing

The first step is to gather detailed information about your property. Establish broad search parameters, then narrow them based on the number of comparable homes you find. For example, if you're pricing a 4-bedroom, 2.5-bath, 2800-square-foot home with a two-car garage that’s 10 years old, you’ll want to find similar properties for comparison.

Key factors to consider:

  • School districts: If schools are important in your area, make sure to stay within the same district. If you're struggling to find comps, you might expand into nearby districts with similar school rankings.

  • Geography: For rural or semi-rural areas, keep your search within the county or a 20-mile radius. For unique properties, such as farms or mixed-use homes, seek help from brokers or appraisers.

  • Home age: Search for homes within a 10-year age range of your subject property. If that doesn’t yield enough results, expand your search.

  • Condition: Evaluate the property's condition, including curb appeal, appliance age, roof, and any other visible wear. Ask the seller if the home has undergone recent renovations, as this can impact pricing.

  • Size: Start with flexible size parameters, such as homes between 1900 to 3100 square feet for a 2500-square-foot house, then narrow the range if too many results appear.

  • Cost per square foot: While useful, cost per square foot should never be your only metric. Smaller homes generally have a higher cost per square foot, and new construction will vary from resale homes.

The style of the home also matters. If your property is a modern home in an area filled with colonials, it may be harder to sell. However, an East Coast Cape Cod in Cape Cod itself might attract multiple offers at a premium price. Adjust your expectations based on the property’s uniqueness.

Really understanding your property is only the beginning, but it’s very important. It flows into the other two steps which we will cover in the upcoming editions. In the meantime, start here and here to learn how to price your listing effectively..

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Just in Case

Keep the latest industry data in your back pocket with today’s mortgage rates:

Source: Mortgage News Daily

“The distance between dreams and reality is called discipline.” — Paulo Coelho

Strive to make your dreams come true friends. Take action. You can do it! Thanks for reading. We’ll see you back here on Friday!

- James and David