Luxury home market breaks two records

Defying market gravity

We feel very fortunate to work in the luxury market. It’s not just about the big paydays and getting to spend our office hours in multi-million dollar homes–though, we won’t lie to you, those certainly are major perks–it’s that luxury clients often don’t face the typical hurdles that other buyers and sellers do.

Our third story today shows just that. Right now, luxury home prices and sales are basically defying gravity. While high mortgage rates are keeping a lot of buyers on the sidelines, that isn’t the case in the upper levels of the market. In fact, we just saw a record for all-cash deals!

We always say that it’s important to dream big in this business, and stories like that show just how big we can dream.

- James and David

Existing home sales fell in March

Existing home sales fell by 4.3% in March to 4.19 million, down 3.7% from March 2023. That’s according to NAR’s latest update. Here are the other key takeaways for March:

• The median existing-home sales price was $393,500, 4.8% higher than a year ago. 

• March saw the 9th consecutive month of year-over-year price gains and the highest price gain ever for the month of March.

• Total housing inventory was up 14.4% from a year ago, increasing to 1.11 million units from 1.07 million units.

• There is a 3.2-month supply of unsold existing homes on the market, higher than last March when there was a 2.7-month supply. Typically, a 5-or-6-month supply is a sign of a healthy market.

Our take

So far this spring, more sellers than buyers have got off the sidelines and got into the market. This has closed the gap between supply and demand, and caused for-sale inventory to rise again. Unsold inventory is higher now than it was this time last year. Nonetheless, home sales slowed in March after increasing in February. Despite the slowdown, sales remain above expectations, even though mortgage rates have moved higher than expected.

What buyers want 

2 out of every 3 buyers want to purchase a single-family residence, according to NAHB’s recent study of home buyer preferences. They found that 16% of buyers want to buy a townhome, 10% want a multifamily home, and 5% want a manufactured home. 

Even after controlling for location, square footage, and quality of materials, the NAHB determined that it would take a 30% discount for buyers to consider purchasing a comparable townhouse instead of a detached single-family home.

The survey is based on more than 3,000 recent and prospective home buyers and provides granular specificity based on demographic factors such as generation, geographic location, race/ethnicity, income, and price point.

Our take

Given the preferences buyers have, is it any wonder that developers build so few townhouses? It is simply not feasible for builders to offer a 30% discount for a townhouse of the same size, quality, and location as a detached home… even one sitting on the smallest possible plot of land! We encourage every agent to carefully study this survey. It offers tremendous insight into the minds of buyers.

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Luxury home prices AND sales increased!

Luxury home prices in the first quarter rose 9% year over year, twice as fast as non-luxury prices, according to Redfin. Sales of luxury homes rose 2%, while non-luxury home sales were down 4%. 

Since luxury buyers are typically undeterred by elevated mortgage rates, a record 47% of luxury homes were bought in cash at the start of 2024. 

Nationwide, the median-priced U.S. luxury home sold for a record $1,225,000 in Q1, up 8.7% from a year earlier.

Here are the 10 most expensive home sales in Q1 2024 per Redfin:

1. Miami, FL (Surfside): $48M

2. Seattle, WA (Medina): $38.9M

3. Los Angeles, CA (Malibu): $38.5M

4. Glenwood Springs, CO (Aspen): $37M

5. Santa Maria, CA (Santa Barbara): $36.8

6. Hilton Head Island, SC (Yemassee): $35M

7. Glenwood Springs, CO (Aspen): $33.5M

8. West Palm Beach, FL (Lantana): $32.5M

9. Santa Maria, CA (Santa Barbara): $32M

10. Nashville, TN (Nashville):$32M

Our take

Agents who work in the luxury home space are very fortunate. The buyers in this market aren’t as sensitive and reactive to the movement of mortgage rates. They have the means to withstand the price pressure. In fact, due to this fact, luxury home sales rose in just over half the metros. If you’re wondering where the biggest jumps happened, they were in Seattle (36.9%), Austin, TX (25.5%), and San Francisco (23.9%). A big high-five to our colleagues there!

Schematics

The news that just missed the cut

• The latest news and updates regarding the NAR settlement

• Realtor.com and Zillow come out swinging for buyer agency

• Take a peek inside Bill Gates’s real estate portfolio

• New Millennial trend: buying homes on golf courses

• CoStar acquires Matterport — and all its data

Foundation Plans

Advice from James and David to win the day

You’ve landed your listing, but what do you do if it doesn’t sell and just sits there growing stale? Today we’d like to explore options you might want to consider, and questions you should ask yourself (other than about price) if you ever find yourself in this position.

Is your listing poorly presented? – Perhaps it has poor or no staging. This includes clutter, questionable smells, not being clean, and not being bright. The goal is for the listing to show like a new construction model home.

Does your listing have obvious impairments? – Are there bad signs like bugs, dog hair, cat box smells, unidentifiable smells or stains, or other off-putting things that could scare off buyers?  Either price it to reflect the condition or fix the condition! Even a dirty, smelly, scary house will sell for the right price.

Does your listing have too many personal items? – You don’t want things like family pictures, degrees on the wall, specific artwork, wildlife ‘mounts’ or anything else cluttering the space. Distractions like these prevent buyers from focusing on the property and envisioning how THEY would live there. That’s the goal. Help potential buyers see themselves living in the space. 

Does your listing have too many showing restrictions? –  If you can only show it on a Friday afternoon if the baby isn’t sleeping and it’s sunny outside, you won’t get many showings!  If you can’t show it, you can’t sell it. This also applies to alarm systems, guard gates, and other complicated security measures. Make sure the barriers to entry are minimal.

Does your listing give a bad impression when you open the front door? –  The other 50% of the buying decision is made in the foyer.  A clutter-free, bright foyer should make the buyer want to see the rest of the house, NOT make them want to turn around and go see the next home.

Inspired and adapted from the work of fellow podcasters, Tim and Julie Harris, we’ve merely listed just a few of the factors you should consider. There are a lot more. Start here and here.

To learn more about Estate Media, visit their website.

Just in Case

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

“You’ve got to keep control of your time, and you can’t unless you say no. You can’t let people set your agenda in life!” — Warren Buffett

Have a wonderful Passover to all those who celebrate! We’ll see you on Friday!

- James and David