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Luxury Homes Are Selling Again. Is it just a wave of bargain hunters or is the market coming back?

Jun 10, 2010

Posted by

Laurie Moore-Moore

Laurie Moore-Moore is the founder and CEO of The Institute for Luxury Home Marketing, an international training and membership organization for agents who work in the upper tier. The Institute offers Read more

Luxury Home Buyers are back!  The National Association of Realtors validated the good news I’ve been hearing from luxury real estate professionals around the country.  NAR’s April 2010 report showed that sales of million dollar plus homes were up 54% year-over-year.  Analyzing an even higher price point, CoreLogic reports that the nationwide sales of homes selling for $2 million to $5 million totaled 2,461 in the first quarter, that’s up 32% year-over-year. Both statistics are good news.

While luxury home showings and sales – especially all cash sales – are up nationally, inventory is also growing.  Sellers are sensing renewed buyer interest and listing again. Not everything is selling, but homes that are at the top of the list with regard to quality, value and marketing are back in demand.  What’s more, international buyers appear to be back.  For instance, one of our Institute for Luxury Home Marketing (ILHM) members called our offices in June to say he had just sold the most expensive home sold in his Florida market for several years. His buyer is from France.

The economic downturn caused many high net worth individuals to feel less rich.  And in fact, the number of wealthy actually declined.  Many affluent stepped to the investment sidelines and some converted investments to cash.  Today, those affluent are evaluating investments to make and residential real estate is often winning, as both a lifestyle decision and a portfolio play. As a result, residential real estate is showing up as a higher percentage of the wealthy’s investment portfolio worldwide.

If we look at statistics from our ILHM National Luxury Market Report (done in conjunction with Altos), there’s specific data that hints at positive market movement.

The number of days which current luxury listings have been on the market has declined, an indication that current inventory is “fresher.”   Our stats also show that as of the first week of June, 39% of current luxury home inventory has had a price reduction since being listed.  You can think of this stat as an indication of how many properties were listed above what the market was willing to pay.  This is also reflected in the decline in the median list price shown by our data.  This decline is most likely evidence that sellers are becoming more realistic about pricing and that the mix of luxury homes on the market may include more “lower priced” luxury homes since there are more of them in total.

We aren’t over the hump yet. Sales may be up, but median list price is down, price per square foot continues to decline, and the percentage of sellers reducing prices after listing is about four out of every ten.  In a balanced market, we’d expect it to be closer to one in ten.  By the way, this is useful information to share with sellers as you negotiate list price or subsequent price reductions.

In a downturn, the luxury market is usually the last segment to slow and the first to come back. At the very least we are seeing a wave of luxury bargain hunters. While I’ll admit to still nervously looking over my shoulder for an economic wild card, I’m hopeful that the luxury residential market is on the path to recovery.  If so, the great exhaling of air you will hear if you listen carefully will be the sigh of relief from luxury REALTORS® across the country.

Want to track luxury market statistics yourself?

If you are not an ILHM member, you can find an executive summary of the Luxury Home Market Report report each week at

If you are a current ILHM member, simply log-in to the members-only section of our website and find current luxury market info (updated weekly) for more than 30 major markets as well as a composite national report. Remember that our weekly ILHM Luxury Market Report data is different in that it is based on current listings (properties on the market now) rather than closed transactions.  One reason we use current listing data is that “sold” data in the upper-tier is difficult to collect.  The advantage of information based on current listing trends is that it is predictive rather than historic information.  You’ll also see that there is great variance from market to market. The report is also interesting when one looks at a specific metro market and compares what is happening in the upper-tier segment to the local aggregated MLS data.