2019 has seen a slow down in the luxury home market, and properties are on the market longer than ever. A combination of rising mortgage rates, the tax code change, rapid price growth, and excess inventory has cooled the market for the country’s most expensive homes.
It’s crucial to find your competitive edge to sell your property.
Know the Markets
The first step is to understand the problem, and how different local markets are affected.
2018 saw a 10% increase in sales of homes priced $1 million and up, but there were declines in some of the most expensive markets such as Los Angeles, Manhattan, Chicago, and Seattle. Then, in the first quarter of 2019, sales of homes $2 million and up dropped a dramatic 16%, which is the largest decline since 2010.
The tax reform has had a huge impact on the luxury market. With the homeowner deductible capped at $10,000 and mortgage interest deduction down from $1 million to $750,000, owning a luxury home is more of a financial burden.
It has also made local markets significantly different from each other. In high-tax states such as CA and NY, markets for high-end homes have a greater cool down than low-tax states. Florida, Washington, and Nevada still have some strength in their luxury markets. It's more important than ever to be aware of the unique forces in your local market and how they affect your homes for sale.
Luxury homes are on the market longer
Luxury homes are staying on the market for a long time, and the days on the market are looking to increase. Settle in, you’re going to have to be patient.
Last year, luxury homes spent an average of 506 days on the market. 23% took more than 730 days to sell. In comparison, the average value home sold in under 80 days. The longer a home is on the market, the more likely it will sell for below asking price. In 2018, the average luxury home sold for only 78% of the asking price.
Timing also depends on the local market. In Palo Alto, CA the average high-end home was on the market for only 86 days. Meanwhile in Florida’s Sarasota and Manatee counties, the average was 1,109 days.
Beat the wait time with a strong marketing strategy
With long waits on the market ahead, strategic marketing of your property is more important than ever. You need to have an edge over other properties, which means employing a marketing strategy that will get high-impact ads in front of a strong pool of potential buyers.
The first step is understanding who you are marketing to. The pool of buyers for luxury real estate is small. Additionally, the wealthy have the luxury to take their time to find the right home, and the best time to buy. These buyers can be very particular, and many want custom-built homes. Millennials have different tastes than Boomers and Gen X, preferring smaller and sleeker residences over McMansions. They also often want second vacation homes.
Identify the unique appeal of your home, and present it in the best light. Go beyond high quality photography with advanced visualizations in video or virtual reality. Target luxury buyers across the web and at exclusive events.
Sky is here to help you develop a strong marketing strategy to sell your home. Don’t delay — take action today!