After years of sluggish sales due to the market correction and buyer uncertainty, luxury home sales are one of the fastest growing sales segments in our local market. Here, we outline what is causing the boom in high-priced home sales and what both luxury buyers and sellers should know if they’re planning to enter the market.
Luxury inventory and prices are increasing
The broader market saw a decrease in inventory in November, but luxury home listings were up 8.2 percent in November 2014 over the previous year. Meanwhile, homes of all prices saw only a modest boost of only 2.7 percent in that same time period.
Additionally, the median home price of luxury homes is $639,900. Home priced at $500,000 and above are considered luxury homes in our market (Northstar MLS).
What this means for luxury sellers: Many would-be sellers avoided listing during the market correction, so they wouldn’t have to take a hit on their property. With a rise in prices and higher home equity in place, luxury homeowners are finding it’s a great time to sell for a fair price.
What this means for luxury buyers: Local buyers with a higher budget will find they have more homes to choose from than those who are buying for under $500,000.
Luxury homes are selling faster than usual
Even with the increased inventory and higher prices, luxury homes are selling faster than they have in years. In November 2014, homes priced above $500,000 were selling in just 66 days. In May 2010, which showed the worst turnover numbers for luxury homes in years, these homes were on the market for a median of 176 days. In short, luxury homes that once took almost six months to sell are now selling in just over two months (Northstar MLS).
What this means for sellers: Even with the highest inventory in years, it’s a great time to put your high-end home on the market if you want to sell quickly.
What this means for buyers: If you don’t find what you’re looking for right away, chances are more luxury homes will come on the market to replace the current inventory. Work with your agent to be sure you’re getting a fair price on your new home.
Total pending sales were up
In November 2014, Northstar MLS showed that we hit pre-correction levels of sales on luxury homes, with 3,372 total luxury homes sold in our 13-county metro area.
What this means for sellers and buyers: Even with record new listings coming on the market, luxury homes are a small segment of our total market in Minnesota and western Wisconsin. If you’re looking to buy or sell a higher-priced home, it’s best to work with a local luxury specialist who understands the exact city or neighborhood where you’re searching or selling. Edina Realty’s Exceptional Properties division specializes in local high-end homes. Call, email or chat to get connected with a luxury home specialist from your area, or start your luxury home search now.