Luxury Real Estate Sale Up Big in All 20 Major U.S. Metros

Sales of waterfront and luxury real estate in the Greater Seattle market have been fairly strong in the past year, as compared to the general market.  Coming off a dismal 2009 of luxury real estate sales, we saw huge gains in total sales all over the Puget Sound region.  Sellers have adjusted their pricing to today's market and prospective waterfront/luxury home buyers have responded in droves.

It seems that much of the same has happened across the country, according to a CNN Money report.  Their analysis is that when the stock market makes gains, wealthier buyers will spend money on real estate, even in a bad economy.  I'd say that's a bit simplistic, but it certainly does have an effect.

More likely, though, these are folks who considered buying a high-end home three to four years ago.  Prices on some waterfront homes have gotten lower than we've seen since 2005, and buyers are betting the bottom is in sight.

CNN Money report:

The rich have returned to the real estate market and are taking advantage of big bargains in luxury homes. Sales of million-dollar homes and condos increased last year in all 20 major metro areas — with some cities seeing an 18.6 percent increase in high-end home sales, according to DataQuick Information Systems. The increase follows four consecutive years of declines in million-dollar homes.

The market that fared the best in high-dollar real estate: San Jose, Calif., which boasted a 27.4 percent increase in sales last year in million-dollar homes. Honolulu also saw a big spike in million-dollar sales — a 26 percent increase — as well as New York, where million-dollar home sales rose nearly 25 percent.

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March 07 2011 - Madison Park
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Since the rich seem to be getting all the tax breaks, I think it is only fair that they buy a few houses.   Just kidding.  Nice post.
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March 07 2011
There's alot of cash and cash buyers floating around these days.  Our economic downturn has affected many in our society but certainly not a majority.  Many luxury homes have desperate sellers, and those with cash are in a great position to take advantage of it.  Good for them!
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March 07 2011
Profile picture for Pasadenan
"Prices on some waterfront homes have gotten lower than we've seen since 2005, and buyers are betting the bottom is in sight." -

That is called "marketing propaganda".

Where are the real numbers?  Anyone can write an article.  It doesn't mean the source is not biased.  And if there is so much money to be made in selling multimillion dollar water front properties, why is Sam's only listing on Zillow for a $158k houseboat?


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March 07 2011
Maybe he is a buyers agent?
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March 08 2011
Profile picture for bberris
"...buyers are betting the bottom is in sight."

And the sellers are betting .... , well they are betting something else about the bottom.
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March 08 2011
Good one, Pasa.   But, yes, I do 90% of my business representing buyers, and business is good (Z won't let me spam my sold properties on the site but you can certainly find them).  The houseboat is a fun listing, though.

Where are the real numbers?  As in these numbers?:
"some cities seeing an 18.6 percent increase in high-end home sales, according to DataQuick Information Systems. The increase follows four consecutive years of declines in million-dollar homes.

The market that fared the best in high-dollar real estate: San Jose, Calif., which boasted a 27.4 percent increase in sales last year in million-dollar homes. Honolulu also saw a big spike in million-dollar sales — a 26 percent increase — as well as New York, where million-dollar home sales rose nearly 25 percent."

Sellers are usually not betting on the market.  They're usually selling to move away, or to buy another home.  The sell-and-buy transaction isn't really a hedge against any market direction unless you're significantly changing price ranges.

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March 10 2011
Profile picture for Pasadenan
But missing from those numbers is:

1) What dollar value qualifies as "high end"?  Over $2 million, or Over $6 million?

2) How are the PRICES in the so called "high end" holding up?  Are they still on the decline?  What is the rate of decline?

3) What percentage of total market share is these "high end" properties?  If it is only 1%, then a 26% increase is still only about 1.26% of market share, thus not really significant at all, and useless information.

Besides, everyone knows that our economy is exceptionally polarized, and that those at the low end are experiencing the unemployment, under-employment, and no increase in income - not even cost of living adjustments, and that those at the high end are seeing substantial rises in their income as well as the benefits of of Government tax cuts and tax breaks.

Besides, if sales in 2009 in that range were "dismal", a 26% increase in sales compared to 2009 could still mean a 90% decline when compared to 2005.

So, as I stated, it is "pure propaganda" without sufficient information to mean anything.
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March 10 2011
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Here is Zillow's median value trend in Seattle for the "upper tier" ownership housing units, meaning only 1/6 (18%) of the properties are valued higher:



Notice, the values are still declining in the upper price range, and the upper price range is no where near what I would call "luxury", at least by Southern California standards.

So, who cares if sales numbers go up when values keep dropping?

Link to Zillow's local info page for Seattle for median Upper tier value trend
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March 10 2011
P, you're trying too hard to link these comments to market values.  The post is about sales volume, not value trends. 

Zillow's graph (above) is nowhere near the "luxury" price ranges we're talking about.  Luxury real estate is usually the top 1% or 5% maximum.  If you're looking for luxury pricing stats, try Denny-Blaine, Washington Park, Laurelhurst, Madison Park, Medina, Mercer Island, Clyde Hill, Hunts Point, and Yarrow Point.

Homes sold over $1 million in King County (Seattle metro) went from
733 in 2009 to 905 in 2010.  Yes, we've already gone over the fact that overall value are down ad nauseum in the Advice Forums, including luxury real estate values. That doesn't negate a 23% increase in home sale over $1 million.

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March 10 2011
Profile picture for Pasadenan
As I already stated, 1.23% of total market as compared to 1% of market is not really significant, especially when that is DOWN from 2005!

The point is that of course multimillionaires can throw away some equity value to buy what they want.

Over $1 Million is "luxury"?  Not here!  It needs to be closer to at least $2 Million plus.

10% decline in value in the upper tier in Seattle over the past year; another 10% decline anticipated this year.  So, if you sell 23% more units at 20% less price with the same commission percentage, your income goes down 1.6%!

Then factor in that your overhead increased in selling 23% more units, and the net difference in your income revenue is closer to a loss of 15%
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March 10 2011
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March 10 2011
Profile picture for Pasadenan
Zillow only indicates 198 ownership residential units were sold in the past 12 months in Seattle for $1.3 Million and over.  And of course, they are having the data collected from the public records for sold price, so it should be reasonably accurate, and should include properties that were never in the MLS as well:



Web address for full sized image:
http://photos2.zillow.com/is/image/i0/i5/i8614/ISfwseky07dbj7.jpg
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March 10 2011
Profile picture for Pasadenan
Thanks for the Link Rudi!

At least Data Quick provides the data without trying to spin it.

So, what DQ indicates for California is 54.773k homes sold for $1+ Million in 2005, and it reduced to 22.529k in 2010, so the number of $1+ Million homes sold annually was DOWN in 2010 from the peak by 58.8%.

Now, obviously some of those 2005 sales were NOT million dollar homes, thus should have never been priced that way.

And the real question, is what is a "healthy market"?  Obviously the bubble years were not a "healthy market".  Normal turnover rate should be people moving approximately once every 7 years, or about 14% turnover.  But in the high end, people shouldn't be moving anywhere near as often.  They should be staying at least 15 to 20 years on average.  At 20 years, that would make the turnover rate 5% annual.
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March 10 2011
As I already stated, 1.23% of total market as compared to 1% of market is not really significant, especially when that is DOWN from 2005!

It's a small and specific portion of the market, hence the specific title and statistics.  A 23% increase in sales is significant to this portion of the market.  And yes, everything is down since 2005.  This is not news.

Over $1 Million is "luxury"?  Not here!  It needs to be closer to at least $2 Million plus.

I lived in Socal for years, yes, the real estate is more expensive.  King County sales of $2 million+ homes went from 101 to 148 from 2009-2010 (a 46% increase).  I'm sure that doesn't change your opinion of the statistics' relevance.

10% decline in value in the upper tier in Seattle over the past year; another 10% decline anticipated this year.  So, if you sell 23% more units at 20% less price with the same commission percentage, your income goes down 1.6%!  Then factor in that your overhead increased in selling 23% more units, and the net difference in your income revenue is closer to a loss of 15%

You're concerned with my income now?  At least I can feel good about that ;)

By the way, your graphs are for the city of Seattle only.  There are far more multi-million dollar homes sold in Mercer Island and the Eastside (Greater Seattle).  My stats are for King County to cover all of those areas.

DQ's stats are interesting--sounds like the luxury market is heading in a similar direction in Seattle and CA.  Prices are still coming down, sales are up significantly in the past year. 
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March 13 2011
 
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Luxury Real Estate Sale Up Big in All 20 Major U.S. Metros
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March 13 2011 | 14 answers
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