This year, we have released our third annual Luxury Homes Index which reviews the listing and price history of the top ten luxury properties in markets around the United States. We are the only company that looks at sales by calculating how long a property stays on market from the moment of its original listing until its sale.
It has become an accepted practice among some real estate agents to take a property on and off the market to refresh the listing. Sellers may also switch agents when they get frustrated about the amount of time a listing has been for sale. As we reviewed the data for the top ten most expensive sales across 56 U.S. markets, we saw that consistent with previous years, the longer luxury properties stay on the market, the lower the price they receive.
Days on market may not be an initial consideration for luxury home sellers who are generally focused on the price they will receive for the home. However, this research, which combines MLS and public property record data demonstrates that the most significant factor in determining the price a luxury property will sell for is the number of days that it has been marketed for sale.
Of the 56 markets analyzed, the average sale price for the top ten homes was $12,219.014 and the total days on market was 506 days. Only 38% of these prestige properties sold in under 180 days. Those properties had an average days on market of 81 days and a sale price of 88% to original list price. For the 62% that sold over 180 days, days on market skyrocketed up to 742 days, and these properties only saw 78% of their original list price, a significant discount off the original value these sellers hoped to realize. This difference of 10% can be substantial when dealing with multi-million dollar properties and does not include the carrying costs, property taxes, or other expenditures of both time and money.
Our year-over-year comparison showed that when compared to the 40 markets reviewed in 2017, the average total days on market remained relatively stable. The average total days on market for those markets was 467 in 2018, down 12.12% from 531 in 2017.
The luxury market is far from uniform, and the research also provided a window into the ways that economic factors influence how these luxury markets function. Last year, property taxes started to play a role. For example, in northern New Jersey, where taxes are high, the average days on market was 692 days. Silicon Valley remains strong. Palo Alto and San Francisco, California continue to be two of the fastest markets for selling luxury homes at 86 days and 103 days, respectively.
In every market, luxury properties face unique challenges. These properties are highly distinctive and have a relatively small buyer pool. Not only does price have little bearing on demand, but buyers are often spread out over large geographic areas, and they don’t typically all arrive at once. For both agents and luxury property sellers, a smart, proactive strategy is necessary to achieve success.
To see how your market fared, you can download the report here (link).