In today’s hot housing market there’s a unique opportunity for move up buyers to get into luxury homes. Most buyers will miss out on it. Most agents don’t even know that it exists.
Let me explain …
No Seller’s Market for Upscale Homes
We are in a seller’s market for homes priced below half a million. The inventory is at historic lows. Most buyers have a hard time finding the home of their dreams, and good listings are snapped away within hours of hitting the MLS.
It is very hard to purchase an affordable home in a great school district without competing with other buyers and offering more than list price.
The upscale segment of the housing market, however, is wide open. In this segment you can choose from a large selection of homes, and sellers are very motivated to let them go below list price.
Luxury homes valued at half a million or more (in Central Ohio these are luxury homes) are hard to sell. Many upscale homes sit on the market for 6 months or more. Many of them are old and need major upgrades.
Why Luxury Homes Offer an Opportunity for Move Up Now
Recently, we analyzed February home sales and compared closed transactions with active listings in various price ranges. The chart below shows the ratio between the number of active listings at the end of March 2016 and the number of homes sold in these price ranges since the beginning of the year.
The results may surprise you. In the $800,000 to $900,000 price range there are 17 times more homes for sale than buyers. There’s a huge selection of homes for a very limited pool of buyers.
We are in a Buyer’s Market for luxury homes. Buyers can choose from a large number of listings (see chart). Some of these houses have not been updated for a long time.
In the $200,000 to $250,000 price range on the other hand this ratio is 1.5 – many buyers competing for a limited number of homes.
Muirfield Village Homes are Hard to Sell
One neighborhood experiencing long sales cycles is Muirfield Village. It is a classic, up-scale subdivision with many golf course lots. But homes are 40 to 50 years old. And Dublin taxes are more expensive than property taxes for similar priced homes in other suburbs.
Here’s how hard it is to sell a golf course home in Muirfield: I know of a home owner who listed a very nice residence on the golf course for $650,000 one and a half years ago. The house was in excellent condition. The owner invested close to $100,000 in improvements, including a new roof, exterior paint, and a new HVAC system.
After 18 months on the market and numerous price reductions that home finally went in contract for around $550,000. The seller had to lower the list price by $100K after spending $100K in upgrades and paying mortgage interest and taxes for one and a half years totaling around $50K.
Why You Should Consider Luxury Homes
There are 3 reasons why you should consider buying a luxury home right now:
- Interest rates are still at historic lows. You may qualify for a larger loan amount and be able to buy a more expensive home.
- Our stats show that sellers are more motivated in the higher price ranges. In many cases luxury homes sell for a 10% discount from list price – sometimes for much less.
- Many luxury homes have not be updated. Homes that need upgrades are very hard to sell and sit on the market forever. If you are willing to do some work, you may be able to negotiate a substantial discount with a very motivated luxury home owner.
Call or text me at (614) 975-9650!
I can show you the upscale neighborhoods with the most motivated sellers, and I have the experience to negotiate a great deal for you!