In my prior post I
discussed the financial criteria, which is deemed necessary to designate a
luxury property in most markets, three times that market’s average sale price. Price however is not the only factor that
determines the luxury worthiness of a property especially in the eyes of
buyers.
The complete formula
to establish what constitutes a luxury property is three times the average
market price in a given area + requisite qualities. Requisite qualities includes a variety of
criteria most of which pertains to the design, overall features, amenities and
the quality of finishes in a luxury home or condo.
As of this posting,
there are 112 homes and condos listed on the MLS® system of the Southern Georgian Bay Association of REALTORS® that meet the financial (value) requirements of being
considered a luxury property. At the
current rate of sales, that represents over four and one-half years of
available so-called luxury home and condominium inventory. As outlined in my last post, the luxury
property market is very small. The
number of luxury buyers is even smaller. Among the available four and one-half years
of inventory, there are almost certain to be some properties that don’t “cut
it” in terms of the requisite qualities required to satisfy discerning buyers.
To begin with, luxury
properties are for the most part one off designs, custom homes designed by an
architect for their high net worth clients.
The finishes must be and often are impeccable and typically include
custom mill work usually performed by talented craftsman on site. Custom kitchens with outstanding cabinetry,
granite, marble or limestone counters as well as high end appliances such as
Wolf ranges and Sub Zero refrigerators and refrigerated drawers are not extras, they are often the normal
expectations in this type of property. The
same applies when it comes to bathrooms. Fixtures such as shower stalls, sinks and
toilets from the local big box home improvement retailer just don’t belong in a
luxury property priced at $1.5 or $2
million dollars. And let's not forget the exterior, it surprising how many of these properties have grounds that are not well landscaped, properly maintained or even the driveway leading into some high-end rural properties is not befitting an expensive home. Technology is becoming an increasingly prevalent and important feature with today’s luxury home buyers. Recent reports indicate that luxury home buyers are looking more at smaller homes but with the very latest in technology from elaborate home entertainment and security systems to the multi-function ability to control heating and cooling, lighting and other aspects of the home even remotely from afar.
“Celebrity status”
also has a bearing on the luxury home market and while this isn't Hollywood, we
do have some television and business personalities with properties in
the southern Georgian Bay market.
Having personally listed and sold a number of higher end properties in recent years, I know first hand that high net worth buyers looking
in these price ranges know and demand quality. Anything that doesn't meet their expectations will result in either (a) “No
Sale” or (b) a discounted offer price reflecting the changes and or upgrades the buyer wants and or needs to make in order to bring the property up to their standards. It's often very disappointing when showing some area properties priced above $1 million to find that quantity of floor space has sometimes taken precedence over quality of finishes and other details. Some sellers do not understand this and can't understand why their property languishes on the market or draws only low a offer and fails to sell.
As they say, "beauty is in the eyes of the beholder," and while we do have some luxurious properties listed for sale in our market, we also have some where the requisite qualities fall well short of what a luxury home buyer(s) demands. This in part explains why we have over a four year inventory of homes listed for sale in our market above the luxury price threshold.
I'll talk more about price in my next post.
As they say, "beauty is in the eyes of the beholder," and while we do have some luxurious properties listed for sale in our market, we also have some where the requisite qualities fall well short of what a luxury home buyer(s) demands. This in part explains why we have over a four year inventory of homes listed for sale in our market above the luxury price threshold.
I'll talk more about price in my next post.
