Has the Luxury Home Market Bounced Back?

The latest news is all awash with stories of a rising real estate market.  The National Association of Realtors estimates that in November 2012, single family homes sold at a 5.04 million annual rate, up 14.5% over November 2011!  But has this filtered into the luxury home market as well? 




1125 H St, Eureka, CA 95501

The answer, of course, is that “it depends.”  A quick glance at 3 of the luxury home markets in which I work shows that different areas are responding in different ways.  In San Mateo County, California, the overall increase in the number of homes sold in 2012 over 2011 was 8%.  Did the upper end of the market move at the same speed?  For the most part, yes!  Homes at the $1M mark made up 18.69% of the total in 2011; and 20.20% of the market in 2012, a statistically negligible difference.  Similarly, homes in the $2M, $3M, and $4M+ ranges kept pace in terms of volume with the overall market.  In San Mateo County, luxury homes benefited from the same bounce seen in the overall local market!

 

In nearby Marin County, California, the overall market volume rose 13%, from 2612 homes sold in 2011 to 3014 homes sold so far in 2012.  Homes in the $1M, $2M, and $3M price ranges kept pace with that increase, roughly maintaining the same level of market share in 2012 that they had in 2011.  But at $4M and over, the number of home sales as a percentage of the overall market went up 30%, from a total of .84% of the market to 1.09%.  In the uber-luxury segment of Marin County, there was a noticeable bump in volume compared to the overall market.

 

But in Humboldt County, California, a more rural, Northern California market, the story was quite the opposite.  While the overall market volume increased 10% in 2012 over 2011, the luxury market, which starts considerably lower than in the previous counties, went down across the board.  At $400K and above the number of homes sold compared to overall dropped 27.6%; at $500K and up, the drop was 41.9%; at 750K and up the drop was a whopping 67.5%. 

As Twain said, there’s liars, there’s damn liars, and there’s statistics!  Overall the real estate market is recovering, but luxury markets across the country are still highly localized.  The bottom line is that each potential home seller or home buyer needs to check in with his local luxury Realtor to get the scoop on his area before committing to a real estate move.