In a shifting U.S. luxury real estate market, homes are taking longer to sell; and when they do, the sale price tends to be well below the original ask. This week, Concierge Auctions, the world’s largest luxury real estate auction firm, released its third annual “U.S. Luxury Homes Index,” analyzing the top sales in 56 of the hottest luxury real estate markets. The index shows that the longer luxury properties stay on the market, the lower the price they receive.
Concierge Auctions examined the top 10 most expensive homes sold in each market to chart the overall health of the luxury tier. The research, drawn from MLS and public property record data, demonstrates that in every economic condition, days on market are an important consideration for luxury home sellers. By calculating this important metric, a window into the luxury real estate market emerges.
“For three years, our research has indicated that the largest factor in determining the price a luxury property will sell for is the number of days that it has been marketed for sale. Every day that a home sits on the market, it depreciates in value,” said Laura Brady, president and founder of Concierge Auctions. “We continue to see that properties either sell quickly for close to their original list price, or they remain on the market for a long period of time and sell for a fraction of this price.”
In 2018, the luxury market continued to be highly segmented with pockets of strength and weakness. As inventory increased in many areas, days on market rose and prices dropped. Of the 56 markets analyzed, the average sale price was $12,219.014. According to the National Association of Realtors, the median home price for all housing types in December 2018 was $253,600.
“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,” said Chad Roffers, chairman of Concierge Auctions. “Days on market is an important indicator for gauging a market’s activity. This valuable information can help agents and sellers anticipate the challenges they may encounter.”
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