Mid – June Update: The single-family luxury home market is starting to split into 2 segments – under $1.5 million which is looking much stronger than last year – and over $1.5 million which continues to be plagued by abundant supply and lower growth in demand.
Overall, we have 13% more supply than 2 years ago, so there is still plenty of choice for buyers. However, the annual sales rate for homes over $500,000 has increased from 5,264 to 7,132, a rise of 35%. So here we can see that the growth in demand is faster than the growth in supply and after a weak period since peaking in mid-summer 2015, prices in most luxury areas are on the rise again, particularly for homes under $1.5 million. It is above $1.5 million where the market starts to change for the worse.
We can see that inventory is over 600 days from homes priced above $1.5 million, and here annual sales have risen from 547 to 596, an increase of only 9%, while supply is up by from 1,030 to 1,140, a rise of 11%. Now we see a problem. When supply increases at a faster rate than demand, sellers are at a disadvantage. Pricing will have a hard time making substantial upward progress until this condition changes. – Cromford Report June 14, 2017
Contact Fitzgerald Luxury Group for a consultation on your property and to discuss how this information may impact you. 480.560.7000