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May 2019 Luxury Market Report ☘ for all Market Areas of the US and Canada ☘ Hoey Team ☘ eXp Realty
Dated: June 1 2019
Welcome to the Luxury Market Report, your guide to luxury real estate market data and trends for North America.
Produced monthly by The Institute for Luxury Home Marketing, this report provides an in-depth look at the top residential markets across the United States and Canada. Within the individual markets, you will find established luxury benchmark prices and detailed survey of luxury active and sold properties designed to showcase current market status and recent trends. The national report illustrates a compilation of the top North American markets to review overall standards and trends.
LUXURY REPORT EXPLAINED
The Institute for Luxury Home Marketing has analyzed a number of metrics — including sales prices, sales volumes, number of sales, sales-price-to-list-price ratios, days on market and price-per-square-foot – to provide you a comprehensive North American Luxury Market report. Additionally, we have further examined all of the individual luxury markets to provide both an overview and an in-depth analysis - including, where data is sufficient, a breakdown by luxury single-family homes and luxury attached homes. It is our intention to include additional luxury markets on a continual basis. If your market is not featured, please contact us so we can implement the necessary qualification process. More in-depth reports on the luxury communities in your market are available as well. Looking through this report, you will notice three distinct market statuses, Buyer's Market, Seller's Market, and Balanced Market. A Buyer's Market indicates that buyers have greater control over the price point. This market type is demonstrated by a substantial number of homes on the market and few sales, suggesting demand for residential properties is slow for that market and/or price point. By contrast, a Seller's Market gives sellers greater control over the price point. Typically, this means there are few homes on the market and a generous demand, causing competition between buyers who ultimately drive sales prices higher. A Balanced Market indicates that neither the buyers nor the sellers control the price point at which that property will sell and that there is neither a glut nor a lack of inventory. Typically, this type of market sees a stabilization of both the list and sold price, the length of time the property is on the market as well as the expectancy amongst homeowners in their respective communities – so long as their home is priced in accordance with the current market value.
REMAINING INVENTORY: The total number of homes available at the close of a month.
DAYS ON MARKET: Measures the number of days a home is available on the market before a purchase offer is accepted.
LUXURY BENCHMARK PRICE: The price point that marks the transition from traditional homes to luxury homes.
NEW LISTINGS: The number of homes that entered the market during the current month.
PRICE PER SQUARE FOOT: Measures the dollar amount of the home's price for an individual square foot.
SALES RATIO: Sales Ratio defines market speed and determines whether the market currently favors buyers or sellers. Buyer's Market = up to 14%; Balanced Market = 15 to 20%; Seller's Market = 21% plus. If >100%, sales from previous month exceed current inventory.
SP/LP RATIO: The Sales Price/List Price Ratio compares the value of the sold price to the value of the list price.
Spring, Taxes, Global Impacts, and New Realities
It was predicted last year that the new tax laws in the US, limiting deductions on mortgage interest and property tax, would cause a slowdown in the overall real estate market. However, it would seem that they have had very little effect. The reality is that other factors have had more influence in the luxury market for both the US and Canada. It has been the impact of global economic uncertainty, changes in purchasing decisions, and a relocation away from high local taxes that have caused the most significant differences. Lawrence Yun, NAR chief economist, stated in January 2019 “The forecast for home sales will be very boring – meaning stable,” and as we can see from the North American statistics (that represent over 65 of the top affluent cities) this statement is, for the most part accurate. In a recent report from Mansion Global, it was stated that while the average entry price for a luxury property has risen to $1.26 million in February - a 3.9% rise - the average market price for luxury homes has dropped 5.1% compared to the same time last year.* It must be clarified that Mansion Global focuses on the Top 5% of the market, whereas The Institute focuses on home sales in the Top 10%. As recognized in previous reports, there are markets still seeing growth in their sales and price points, typically lower-priced or new luxury markets such as Houston and Austin in Texas, Nashville in Tennessee, Arlington in Virginia, and Montreal and Ottawa in Canada. However, the majority of luxury communities have seen a plateau in their sales and home values and a number of traditionally expensive cities, whose price points are typically higher than average, are seeing a decline. To gain a perspective of the luxury market from the ground up, we are turning to our members to provide their local insights on the trends and expectations of this transitioning market. Look to see how these findings could also prove relevant to your market or property type. This month we have chosen three diametrically opposite cities. Vancouver on Canada’s West Coast is
recognized as one of the newest desirable luxury cosmopolitan cities to have emerged in the last 10 years. Well-heeled and established Chicago, Illinois is considered to be a rock of stability in terms of its real estate market and Scottsdale, Arizona, is the epitome of retiring wealth and second homes. Between 2008 and 2016, Vancouver’s real estate prices surged to a point that local residents struggled to purchase within their own city. In efforts to tame the market, 2016 saw the implementation of a slew of taxes and regulations. These taxes are mainly applicable to foreign investors and non-residents, who many considered to be the reason behind this explosion. The luxury market was the first to feel the impact of the regulations with the number of sales dropping 26% in the $1 million price range and a staggering 49% for the $4 million plus during 2018. Nearly two years later, the lower end of the luxury market is faring better, however, the upper end is still seeing a softening in its price points. “Affluent buyers are beginning to return as they realise it’s a great time to buy in Vancouver,” says Elizabeth McQueen, a Top 5% Luxury Professional in Vancouver with over 25 years of experience, “especially for buyers looking for the lifestyle associated with living in this cosmopolitan city.” McQueen continues that “prices have dropped and sellers have just needed to take time to become re-educated with this new paradigm. Just look at any established luxury city throughout the world – London, Paris, New York, Sydney, they have had heavy taxes on their luxury homes for many decades.” This may be a cautionary tale to luxury markets that are currently experiencing exponential growth! However, McQueen says that if you look at statistics over a long period of time, market corrections are always followed by prices going higher once the market returns, after all, the demand for land and property still exceeds supply. Chicago, considered to be the city of steady real estate growth, reported in 2018 that the luxury market of $1 million plus grew only 1.7% compared to a big year of 10% in 2017, and the forecast of a slower 2019 has proven true to date. “Most of this year’s luxury sales have been for the new luxury condominium market” states Patrick Ryan, another long-term veteran with over 15 years of experience as an active luxury expert, consultant, and managing broker. “The demand far outweighs the supply for these new luxurious 12-1,400 square foot apartments, which has caused an anomaly in our market as they fetch extraordinary prices; whereas older condos are proving harder and taking longer to sell – and this disparity could be the reason for a decrease in the number of sales.” Ryan’s advice to sellers in more established homes is to recognize that in today’s market their home could be considered dated as the vast number of affluent buyers are looking for turnkey properties with all the modern accoutrements. “Time and immediate satisfaction are of the utmost importance to affluent buyers – they simply do not want to waste their time doing renovations, and they are willing to pay the price. Today’s buyers have all the information at their fingertips, and if your home isn’t marketed to showcase its significant differentiators, they will move by quickly to find the home that does check their boxes.” Ryan also sees a trend of both technology and medical industries moving into Chicago, and forecasts the downtown infrastructure, public transportation, and affordability compared to west coast cities will probably spearhead the luxury market in future years. This is a trend that is being emulated in many of the secondary luxury markets in the central and eastern areas of the continent. Scottsdale, long associated with as a winter home destination for snowbirds, retirees looking for great weather for 9-10 months of the year, and its lower cost of living (and let's not forget golfing) is experiencing an increasing influx of new homeowners from California, Seattle, Chicago, and New York. As Jordon Ayan, partner and founder of The Lifestyle Collection, states “the most common reason I hear that people are looking to move to Scottsdale is because ‘taxes are killing them in other parts of the US’ and they are ready to either downsize or enjoy a property that offers better amenities for their money.” To date, statistics show a slow start of the traditionally busy spring/summer season throughout North America, but perhaps Scottsdale will be indicative of the trend to come. “Scottsdale’s busy season typically starts in October and runs through to May, but this year buyers came to the table rather late with sales starting to close in March and April” stated Ayan. “Buyers are definitely more educated; they know the inventory and have often been researching the stats for months. Their buying trends are moving towards smaller homes with large storage spaces and the lock and leave properties.” Agreeing with both Elizabeth McQueen and Patrick Ryan, Jordon Ayan explained that the other major trend is for new or completely renovated properties and these buyers, typically young empty nesters or retirees are looking for turnkey properties with little associated work. Despite the differences in these markets, it is obvious that the trends we have been reporting on for the last six months - such as smaller properties, new or completely renovated turnkey homes, lower price points to allow multiple location ownership, and greater access to lifestyle and local amenities - are the key aspects in understanding today’s luxury real estate market.
SINGLE-FAMILY HOMES MARKET SUMMARY | APRIL 2019
• Official Market Type: Balanced Market with a 16.07% Sales Ratio.1
• Homes are selling for an average of 96.94% of list price.
• The median luxury threshold2 price is $1,000,000, and the median luxury home sales price is $1,472,000.
• Markets with the Highest Median Sales Price: LA - Beach Cities ($3,800,000), Napa County ($3,500,000), Vancouver ($3,362,500), and San Francisco ($3,296,000).
• Markets with the Highest Sales Ratio: San Francisco (84%), Seattle (53%), Silicon Valley (52%), and Washington D.C. (44%).
ATTACHED HOMES MARKET SUMMARY | APRIL 2019
• Official Market Type: Balanced Market with an 16.12% Sales Ratio.1
• Attached homes are selling for an average of 98.18% of list price.
• The median luxury threshold2 price is $693,725, and the median attached luxury sale price is $925,000.
• Markets with the Highest Median Sales Price: Vail ($2,780,000), San Francisco ($2,360,000), Naples ($2,356,378), and Park City ($2,082,500).
• Markets with the Highest Sales Ratio: Arlington & Alexandria (109%), Fairfax County (98%), Silicon Valley (73%), and Marin County (64%).
PLEASE ASK US FOR THE FULL REPORT with more detailed data and statistics ☘
Also; please check out the other blogs, and tabs to many other different Links, Updates & Reports that we have here on our informational website. ☘
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