RISMEDIA, October 14, 2010—While the residential real estate market continues along bumpy terrain, high-end real estate is providing a land of opportunity. Here, Philip White, president and COO of Sotheby’s International Realty Affiliates LLC discusses the unique situation that has presented itself in the high-end market.
As today’s knowledgeable investor knows, the luxury real estate market is a land of opportunity. The stock market’s recovery, combined with improved financing rates and more stable pricing, has created a unique situation for those on the sidelines considering an investment in high-end real estate.
And that opportunity has not gone unnoticed, as is evidenced by an increase in sales and transactions: The Wall Street Journal, in a May 28 article on luxury sales, said, “Attractively priced homes in some of the nation’s most coveted neighborhoods are selling, sometimes fast and sometimes with multiple offers. Nationwide, sales of homes selling for $2 million to $5 million in the first quarter totaled 2,461, up 32 percent from a year before…”
As well, at the Sotheby’s International Realty® brand, our overall transactions have increased more than 50% over last year, with almost twice as many properties over $1 million selling in the first six months of this year as last year, and an increase in transactions over the $5 million mark.
For example, the Aspen, Colorado market was one luxury market hit very hard by the global market challenges. However, the tide is changing quickly as consumers recognize the outstanding values available there right now. Every month, the Sotheby’s International Realty brand analyzes the top sales in its network, and in April, our company that represents this market, Morris & Fyrwald Sotheby’s International Realty, had five sales above the $9 million mark. In addition, our Manhattan offices have seen a resurgence in the upper-end market, with 15 sales over $10 million.
Thanks to an improvement in the stock market, people feel more comfortable making an investment, and for those who need financing, rates are better than ever. There is also some fancy footwork being done to secure a good deal, from trading an existing property as part of the transaction to creative financing options or conservation easement, which offers tax advantages.
Sellers also are more accepting of the fact that they may need to reduce their price in order to sell, and they realize their buyer may not be in their own backyard but rather in another state or country, which underscores the importance of having a global reach. That is why at the Sotheby’s International Realty brand our efforts—from our affiliation with the Sotheby’s Auction House to our unique media marketing partnerships and multilingual website—center on providing our affiliates this kind of audience. Consequently, we place global referrals on a daily basis.
The luxury goods market as a whole is back in vogue now but the perception of it has undergone a shift in the mind of the consumer. There was a time when luxury was not “in” as a result of our global economic challenges. Those in the industry believed that would be temporary and it has proven to be.
The new cocktail party conversation revolves around people boasting about the value they got for their money—as opposed to the days when talk centered on how much they had paid or overpaid.