Luxury Home Sales Start 2014 With a Whimper

As was reported in my regular blog, area real estate sales in the first quarter of 2014 have gotten off to a somewhat slow start.  This winter's excessive snowfall and abnormally cold temperatures have had a profound impact on our ability to show properties and in many cases weekend road closures prevented would-be buyers from making it up here even when showing appointments had been booked.

As with the mainstream segment of our market, the upper-end price ranges or luxury home market has felt a softening of sales in the first quarter of 2014 versus 2013 with one notable exception.  Sales in the $700,000 to $800,000 range from January 1st to March 31st are five times higher than the same period last year with 10 MLS® sales having been reported in this segment compared to just 2 one year ago.  At the present time, there are 46 properties listed for sale between $700,000 and $800,000 or roughly 13 months worth of inventory.  Conversely, there are 89 active listings for homes and condominiums price above $1 million which represents 4.4 years of inventory based on the current rate of sales.

  Typically, first quarter sales in the upper price segments of our market are very strong.  I have always attributed this to the timing of year-end bonuses paid to senior executives or business owners having had a good year and thus affording them to make a large discretionary purchase as a reward.  There is seemingly no sound economic reasons to explain the weaker luxury home sales during the first quarter or 2014.  Interest rates remain low although many of these purchases are cash anyway. Consumer confidence is up and real estate remains an attractive investment for most.  

  I suspect the arrival of warmer weather will trigger an upturn in market activity overall and this will spill over into the upper end market segments as well.

Are Luxury Home Open Houses Effective

Over the past several years I have had the privilege of listing and selling some noteworthy luxury properties in the area ranging in price from $1 to $2.75 million.  Through those sales I gained some great experience working in this exclusive and extremely small segment of the market.  Further, through attending the National Association of REALTORS® conference in the U.S. I have met and kept in contact with two of the top luxury home REALTORS® in the U.S. and I have read both their books dealing with the luxury home segment.  This has and continues to give me additional insight into the luxury home market which along with my own experience I will share via this blog.

  Many sellers and REALTORS® for that matter question the value of Open Houses.  I can honestly say that in over 13 years of practicing real estate, I have never sold a home through an Open House.  I have however met many people to whom I sold another property to at some later point in time.  Properly utilized, Open Houses have always served as a great way to meet people and gain potential clients.  Every once in a while, a house will sell through an open house but it’s rare.  Times however change and the validity of holding an Open House even for an expensive luxury home should not be discounted or casually dismissed.

  

  As I have stated before, technology and primarily the Internet has had a profound impact on all manner of businesses and real estate is no exception.  Many buyers spend weeks if not months searching for properties online.  Buyers have often viewed countless listings and gathered an abundance of information before they ever talk to a REALTOR® much less step inside the front door of a home listed for sale.  An open house, properly executed even for expensive properties can serve to bridge the gap between a prospective buyer sleuthing around online versus physically getting into a property and meeting a REALTOR® with whom they can develop a relationship.

 

  Much of the real estate market here on southern Georgian Bay has traditionally been made up of secondary properties.  While some potential Buyers in this market may be moving up from a lesser property to one of greater size and value, many of these buyers currently do not reside here nor are they ultimately familiar with the market.  I often find that a great number of attendees at Open Houses ask more market related questions than they do about the property they are in.  As a REALTOR®, this creates an excellent opportunity to demonstrate your expertise, thus potentially gaining their trust as a client. 

  What’s changed in recent times however with respect to Open Houses is this. On an increasing basis however, I learn by asking questions of my Open House attendees that they have seen and have been watching the listing online.  They have never called or emailed me to inquire further but as soon as they learn of an Open House being held, they are there.  The Open House is a non-threatening way to get inside for a first-hand look without feeling pressure by contacting a salesperson.

  In my next post I will touch on the various ways in which a luxury home Open House can be organized and executed in order to generate the best results.   

Winter's Cold Grips Our Local Real Estate Market

Our adverse winter weather is continuing to have an impact on local real estate sales and while activity improved significantly in February, year-to-date sales remain well behind last year.

Sales reported through the MLS® system of the Southern Georgian Bay Association of REALTORS® in February reflected a 3% decrease from one year ago with 122 properties selling during the month compared to 126 last year.  February’s dollar volume however was up 11% due to an increase in higher price home sales.  Sales in several price ranges between $500,000 and $1 million posted significant gains over last year leading to the higher dollars among 

lower unit sales.

  Year-to-date MLS® unit sales for the first two months of the year are down 14% with 205 properties changing hands compared to 239 in 2013.  MLS® dollar sales for the year of $65.9 million are down 9% year to date.  Sales activity in 2014 is also lagging behind the first two months of 2012 with MLS® unit and dollar sales down 5% and 7% respectively.

With the exception of Grey Highlands which is showing an increase of 67% in MLS® units sales year-to-date, every other area municipality are lagging behind 2013 and weather appears to be the culprit.  Severely cold temperatures, excessive snowfall and road closures have resulted in cancelled property showings leading to less activity and reduced sales overall.  On a year-to-date basis, single family home and condominium unit sales are both down 19% from one year ago.  Conversely, we have seen some renewed interest from Buyers looking for vacant land as lot sales are up 38% this year with 22 MLS® sales reported compared to 16 after the first two months of 2013.     

  As in prior months, we continue to see a reduction in the number of new listings coming to market and expired listings are also down as well.  The monthly listings-to-sales ratio for February reflects a somewhat balanced market, and while with only being two months into the year this is not reflected in the year-to-date results, I anticipate that overall, stable market conditions will prevail through the balance of 2014.  Within certain areas and price ranges there will be exceptions.  As of this posting there are 102 active listings on our local MLS® system for properties priced above $1 million.  Based on the rate of sales for properties of this value, that represents approximately 48 months worth of available inventory.  With this amount of housing stock, sellers of properties priced above $1 million can expect much longer days-on-market and pricing expectations may have to be tempered.

Whether you are buying or selling, I am well versed in all aspects of our market so as to effectively assist you.  Please do not hesitate to contact me for a confidential no obligation discussion about your particular real estate circumstance.