Depending on who you want to listen to, the luxury home scene is either a stagnant buyers market or it is trending upward. The Seattle Times reports on the small number of buyers relative to million-dollar-plus listings.
There are dozens of grand homes — daresay mansions — such as the Westwold in Snohomish County. Yet despite their size, these houses have gone somewhat unnoticed in a real-estate market usually characterized by new subdivisions.From Woodway to Mukilteo to Lake Stevens, Snohomish County is home to some luxurious estates. With high bluffs on Puget Sound to the west and many lakes, the county has prime real estate for homes that rival those in King County’s upscale areas.
There are large homes along the bluffs in Mukilteo and south Everett — former Everett Mayor Ed Hansen has one. There are some grand estates on Lake Stevens, including a 10-bedroom home once described in a real-estate listing as a "castle on the lake."
…
Elizabeth Erickson, a real-estate agent and owner of Gallery Homes in Mukilteo, said luxury homes have always been something of a buyer’s market.Pulling listing data for Mukilteo, where she does most of her business, she said that for the 22 active "luxury" listings in that city, there probably are two or three buyers at any one time. The average time those homes have been on the market is 91 days, she said.
With luxury homes and their amenities, the rich can pick and chose.
…
Large homes started popping up in the county at about the time the railroad got here, said David Dilgard, a history specialist with the Everett Public Library’s Northwest Room.People first got rich here through land speculation, Dilgard said. A parcel in what would become Everett became exponentially more valuable when the railroad came to town in 1892.
Many unlucky speculators, however, literally died waiting for the train.
"In this area, speculative nonsense was always kind of the rule rather than the exception," Dilgard said.
I think that quote applies to a lot more than just the luxury real estate market, even if it wasn’t meant that way.
From the other side of the fence, John L. Scott himself makes the case that luxury real estate sales are climbing their way out of a post-dot-com slump.
The dominant story in the Seattle/Puget Sound housing market over the past five-plus years has been historically low interest rates leading to record first-time buyers and record home sales—primarily in the more-affordable price ranges. During this time of abundance for much of the housing market, luxury real estate sales were slowly recovering from the residual effects of the dot-com decline in early 2000, which saw luxury home sales plummet in a matter of months, causing values to fall, and a surplus of inventory to flood the market. However, time and a stronger economy have helped heal the luxury market, and 2006 is showing continued signs of improvement for the highest echelon of the Puget Sound housing economy.
…
The past few years have been a time of recovery for the luxury market, but the first half of 2006 is appearing to follow the ten-year cycle as described above by Alan Pope. The proof is in the stats which indicate that while inventory continues to rise, so too do the number of buyers and the absorption levels. Sales are definitely strengthening with a 50% increase over year ago totals. However, inventory levels are higher too. In June 2005, there were 1,428 million-dollar-plus homes on the market, compared to 1,839 available properties in June 2006. While inventory is higher, so too is the absorption of this inventory—up by nearly two percent compared to the first half of 2005. All of this points to clear indications that this segment of the market is trending upward.The largest influence on the local luxury real estate market is the Puget Sound Economic Cycle, which is currently running contrary to much of the rest of the country because our largest corporations, such as Boeing and Microsoft, are hiring—including at the executive level. The Puget Sound region continues to see migration from California and other areas outside of the Northwest because of the economic opportunities and quality of life that is available here. Furthermore, the record sales over the past few years in the more-affordable and mid-priced housing markets have caused a chain reaction of sales that are now being felt in the high-end.
And of course for good measure, Mr. Scott made sure to throw in your daily dose of the "Seattle is Special" mantra. I should trademark that phrase. Maybe come out with a line of t-shirts or something.
Seattle is Specialâ„¢
(Brian Alexander, Seattle Times , 08.16.2006)
(J. Lennox Scott, RISMedia, 08.17.2006)
The Times article is only talking about luxury homes in Snohomish. Doesn’t surprise me that they’re hard to sell…I think most people would rather live a little closer to the city. Mukilteo isn’t exactly my idea of a metropolis.
They luxury market in King County and Seattle is still super competitive.
Bunk Meshugy, this house right up from me has been sitting on the market all summer long without any takers. And they’ve diligently been doing the open house thing ever summer… I know because every time I mow the lawn, I have to scoot their sandwich board signs…
Although, if you’re going to dispute if 1.3 Million is luxury, well hell, that might just be the bubble talking.
Puget Sound Economic Cycle, which is currently running contrary to much of the rest of the country because our largest corporations, such as Boeing and Microsoft, are hiring—including at the executive level.
This joker must have missed the memo, Boeing Corporate bailed E.Marginal Wy and are now somewhere in the steel and glass of downtown Chicago… that and we just shut down Connexion… GANGBUSTERS I tell you!!!
This joker must have missed the memo, Boeing Corporate bailed E.Marginal Wy and are now somewhere in the steel and glass of downtown Chicago
That’s old news…and they only moved the suit and ties. The planes are still built here.
Both Microsoft and Boeing have been on a big hiring spree lately. Microsoft hasn’t had so many new hires since 90s. The job outlook is pretty strong for Seattle right now. If that were to change we’d be more likely to see a real estate crash. As it stands were on pretty solid ground.
Meshugy…. Boeing Corporate were the executives, ironically the old E.Marginal Wy address filled with Connexion, who are now bust. This isn’t old news, unless my eyes decieve but Connexion rolled over and died this morning…
Keep up with the posts, come on, this is about the luxury home market. Take of the rose-colored glasses for a second.
People who hammer planes together, and even engineers like me, cannot support a luxury home market, unless and my union brothers all decide to turn one of these 1M+ places into a commune…
Is that a _Registered_ Trademark, Tim?
I couldn’t care less about the luxury market. It’s almost another world, and only very marginally impacts the vast majority of homes actual humans can afford.
That said, my guess is the speed in which the prices of luxury homes will crash will be outpaced only by the cratering of new condo prices downtown.
The job outlook is pretty strong for Seattle right now.
If housing construction and sales fall back to trend levels, it would mean many job losses.
About
>Seattle is Specialâ„¢
After a month or four of reading NWMLS data, looking at numbers (inventory, closed nos and prices, etc). I would say, it is special.
Or atleast it is tracking somewhat differently than other parts of the country, particularly Florida and California. Some would also, say, it started late and will end late.
Consider the following numbers for King County Single homes.
1. For the last 3-5 months of closed sales prices, MOM price increase is around 10% (I know that is atleast 2-3 months behind today’s prices, but is the only information to go by, asking price is not as solid indicator.)
2. Inventory though rising MoM for a while (since Nov 2005), it is only in the last 3 months YoY inventory % turned positive. Overall inventory is below 2004 highs, in other places it is 50-100% above 2004 highs. In some like Tampa, LV, it is even more.
I would not buy a house now due to the risk. Yet how bad things will get is not a given unlike in other places.
Amit
Disclaimer: I am not into real estate profession and am renting.
1. For the last 3-5 months of closed sales prices, MOM price increase is around 10%
Can you clarify this? 10% month over month price increases for 3-5 months would mean houses had gone up in value between 33% and 61% during that time period.
I’m sure there are a few “samples” of neighborhoods that have done this, but that’s well above average.
richard,
That is a cumlative number ofcourse.
For single family home, the close sales median price in king county from Feb 2006 to July 2006
$392,950 0.76%
$405,000 3.07%
$419,500 3.58%
$427,950 2.01%
$434,950 1.64%
$435,000 0.01%
= 11.07% to be exact for 6 months.
You can get this from Tim’s large spreadsheet or the NWMLS Recaps.
Do tell me, if I missed something.
Amit
I live on Queen Anne. I’ve been very interested in the micromarkets of Magnolia and Queen Anne. Luxury homes ain’t movin on Queen Anne. They’re just not. I’ve seen DOMs of 100+ in several that I’ve been tracking. A couple of the ones I’ve tracked with fewer DOM have been relisted to “reset their clocks” so to speak.
Additionally, a friend of my mother’s is a very prolific, high end real estate agent in the Windermere/Laurelhurst area. She was over one afternoon last week and when I asked how business was going, she flat out said that it’s gotten “seriously slow” and how “nothing has sold in weeks”. Every last home in Laurelhurst and Windermere are considered luxury, so, I’m going with the pro I know on this one.
Every last home in Laurelhurst and Windermere are considered luxury, so, I’m going with the pro I know on this one.
Good thing they’re putting up some affordable townhomes just outside the gate to Windermere.
Amit, your post said 10% month over month (61% cumulative appreciation). 11% since February makes more sense.
Hell, if it was up 61% you wouldn’t find anyone that bought last year selling at a loss this year!
Richard,
My mistake! :)
On the topic, the only investments that has seen that kind of returns this year has been gold\precious metals and maybe energy.
Amit
Amit,
First, a swath of six monthly stats doesn’t indicate much, as residential RE tends to be susceptible to seasonal cycles (goes up a lot in the Spring/Summer, declines/flattens in Autumn/Winter).
If the six months you posted were to be analyzed, though, they suggest that median prices are flattening out. That, coupled with the sliding sales figures for that same time period would indicate that King County is headed for an RE doomsday or at least a soft-landing.
However, if you look at that monthly data over a course of 6 years, with a rolling yearly average, you will see that prices are trending up, and that sales have taken a sharp dive for the first time in recent memory. This, coupled with a flattening total sales volume, suggests that the money for the King County housing bubble is drying up (in a way that is not dissimilar to the way things played out in Southern California).
Funny, I had a television Stand up on Craigslist.
Who shows up Boeing Engineer haggles for 20 bucks on a television stand. He ended up being a really stand up guy chated for Quite a while after the haggling over price.
He tells me in confidence- That he can’t barely even afford an apartment for him in wife in the Bellevue area.
Really are the Boeing Wages that bad?
When MUSHUGY Stops showing up the market will trully be in frefall.
Mushugy will be acting just like I was after my Infospace stock..
Put it this way the market made me sick for about 2 years after the fact.
Mushugy and many like will be very-very sick for a few years after the hangover kicks in.~!@@
Possibly, This time arround the chances are that when people are the point of hating real-estate that will be ABOU9T the right time to buy~!!
plymster,
All I am trying to point out is, it just might be different, atleast for now. Will it go down, most probably yes.
>First, a swath of six monthly stats doesn’t indicate much, as residential RE tends to be susceptible to seasonal cycles (goes up a lot in the Spring/Summer, declines/flattens in Autumn/Winter).
I agree with the general statement above, but it needs more details. Here is what I noticed. Sale Nos depend on cycles and are thereby better tracked yearly YoY, prices are more month to month(increasing in a hot market and decreasing in a cold one.) Inventories are kind of in the middle, YoY will show a trend, but it is worth knowing MoM +/- to get advance idea of where the market is heading.
So, month over month price changes is important too.
Watch for the first 2-3 months, MoM prices go down.
Amit