Polar vortexes are freezing home sales in much of the nation this winter but the luxury segment is finding the temperature to be just perfect as both sales and price increases warm up million dollar plus markets from coast to coast.
Yesterday economists at the National Association of Realtors reported sales at the upper end –million plus-are rising quite swiftly. Homes selling now may have more bedrooms, square footage, and other valuable amenities than homes that were sold last year.
Last week CoreLogic’s Sam Khater suggested the stock market is a barometer of the wealthy consumer’s confidence and million-dollar home sales and the S&P 500 are highly correlated. “In fact, the S&P 500 serves as a very good two-month leading indicator of million-dollar home sales. While the S&P 500 dipped in the last few weeks of January 2014, as of mid-February, it remains at roughly the same level as in December 2013, so one can expect million-dollar home sales to remain strong as long as the stock market remains high,” he wrote.
Market data from the Institute for Luxury Home Marketing confirms that compared to a year ago, the luxury market is thriving. National median prices for homes priced over half a million have risen to $1,322,653, up more than 7 percent from February 2013. Properties are spending 26 fewer days on market. More houses are selling every week and the market action index created by Altos Research is just one tick below a seller’s market, a rare occurrence in the middle of a nasty February. The good prices have even generated a modest uptick in inventory among sellers eager to get into the action, also unusual in February.
Hottest markets are Denver, Detroit, Honolulu, Las Vegas, Los Angeles, Miami, Philadelphia, Phoenix, Seattle and Ventura.
Luxury sales in California ended the year on a roll, according to DataQuick. The number of California homes that sold for a million dollars or more rose last year to the highest level in six years, the result of rising home prices and an improving economy, among other factors. The strongest sales gains were at the luxury market’s high end, with record sales above the $2 million mark.
A total of 39,175 homes sold for a million dollars or more in 2013, up 45.1 percent from 26,993 in 2012. It was the highest number sold since 42,506 in 2007, according to DataQuick. The all-time high was in 2005, when 54,773 homes sold for $1 million or more. Last year’s 45.1 percent year-over-year increase in $1 million-plus sales easily eclipsed the state’s housing market as a whole: Overall home sales totaled 446,319 last year, down 0.6 percent from 449,059 in 2012. Last year’s increase in luxury home sales reflects the combination of rising demand and sharp price appreciation that pushed many homes up over the million-dollar threshold.
“The luxury home market is unique, always has been. It responds to its own set of economic factors. Things like job growth, mortgage interest rates and migration patterns do not play the same role as IPOs, stock market performance or how well one type of investment does compared to another, and where one wants to park one’s excess money. The $2 million threshold seems to be a more interesting cutoff point. Homes selling below that level do seem more responsive to the more traditional market factors,” said John Walsh, DataQuick president.
Statewide, 840 homes sold for more than $5 million last year, an all-time high and up 20.3 percent from the previous high of 698 in 2012. In the $4-$5 million range a record 596 homes sold, up 29.3 percent from 461 in 2012. In the $3-$4 million range, a record 1,455 homes sold, up 31.3 percent from 1,108 in 2012.
In the $2-$3 million range sales totaled 4,492, a record and up 37.4 percent from 3,269 in 2012. In the $1-$2 million range, 25,352 sold last year, up 42.5 percent from 17,791 in 2012 but still 26.1 percent behind the all-time high of 34,313 in 2005.
The most expensive confirmed purchase last year was a 15,355-square-foot, 8-bedroom, 14-bathroom beachfront Malibu mansion built in 1993 which sold for $74,500,000 in January. The largest was a 25,447-square-foot, 16-bedroom, 18-bathroom mansion in Indian Wells that sold for $2,250,000.