End of Summer, Coming Right Up
The summer is rapidly closing down, although the real estate market continues to move, and in honor of “back to school,” it seems like a good time to highlight some recent real estate developments. Never stop learning!
Luxury Home News of Note
Recent news reports noted the listing of two famous properties for sale—the E.B. White “Charlotte’s Web” house in Maine ($3.7 million) and the "Clampett Mansion," the house used for the exterior shots in “The Beverly Hillbillies” (at $350 million, the most expensive property on the market). The whopping price tag of the Clampett Mansion (known as Chartwell) underlines an emerging truth in the current real estate market – the cost of luxury homes is finally on the rise again, as properties have started to pick up speed even in that bracket.
Naturally, Chartwell won’t move quickly by the usual standards – that’s quite a price tag, and will need a very specific buyer. Luxury homes even well below that price stay on the market for years. The Mary Tyler Moore house in Minneapolis, for instance, just recently found a buyer after going up for sale in 2012—a five-year lag time for a truly luxurious house (see pics and info here, to get a sense for the quality of this property). After a starting price tag of about $2.9 million, the house went to “pending” status this month, and although the accepted offer hasn’t been made public yet (it should close in the fall, and then become part of the public record), the sellers were most recently asking $1.7—quite a discount.
CNBC’s “Realty Check” article, "Luxury home prices soar as sellers come back down to earth" (August 3), gives an interesting (and brief) overview theory on the luxury market today as compared to past years, if you’d like to read more about that topic.
In the general market, of course, prices have also been rising, and it seems buyers may be starting to rebel. Of course, their lessened interest may have to do with unrealistically-inflated expectations on the part of the sellers who are determined to take advantage of what has proven to be a fast market this year. “Home prices in some major markets are now overvalued, when compared with local incomes. While mortgage rates have remained low, the expectation is that they will move higher toward the end of this year, which could sideline even more would-be buyers,” writes real estate journalist Diana Olick (Housing Demand Strengthens Through Summer, But Here's Why Some Buyers Are Giving Up). Remember our recent blog post that mentioned a house appraising at about $40K under the offer price (How High A Price Can I Ask For My House)? That’s not the only instance – and many houses at current list price risk a similar setback.
A fast seller’s market does not mean “anything goes” when it comes to price; we get price-reduction notices from other agents all the time (and to be fair, have reduced our share of prices as well – real estate is not an exact science, and the seller makes the final call on a home’s listing price, not the realtor). One local house, for instance, currently listed at $450K, last sold five years ago at $275K. There would have to be some serious updates to justify that big of a price hike - not that prices haven't appreciated significantly since then, but local comparisons for the last 12 months just don’t support it – one fully updated comp sold at $340K in November 2016, and another one only brought $326K this June.
In fact, that house has never sold for more than $370K, although it has failed to sell (been cancelled or expired) on four separate listing occasions above that price (all in about a decade).
With that in mind, here are my "back to school" application tips for today’s market:
Agents – keep your clients’ feet on the ground.
Buyers – don’t worry, your market is coming. Eventually.
C (s)ellers – be realistic! Your house will only sell at the right price.
Posted by L. Lathrop for Jim Burns