Record-Breaking Sales: Luxury Home Market Continues Unprecedented Growth In 2023

As we kick off 2023, the sale of luxury homes continues at a frantic pace. However, with mortgage interest rates up greatly over last year, it's possible that we may see a slowdown in the market compared to last year's record-setting numbers.

In this quarterly report, we'll be taking a closer look at the supply and demand for luxury homes, examining the average market time and percentage of asking price received by high-end home sellers in Tallahassee. We'll also provide insight into what luxury homeowners can expect to see in the coming months and years as the market moves forward.

So sit back and join us as we explore the current state of the luxury home market.

Luxury Homes For Sale In Tallahassee

The following list of luxury homes for sale includes all single-family detached homes priced at $1M and higher.

2023 Ranks First For Million Dollar Homes Sold

As I write this article in mid-March of 2023, mortgage interest rates are 59% higher than they were one year ago, but sales of million-dollar homes are hotter than ever.

This graph shows the trend of annual million-dollar home sales over the past 12 months. Currently, the market in Tallahassee is slightly below its all-time high of 50 million-dollar homes sold annually.

Despite mortgage interest rates doubling early last year, the growth of the high-end market did not slow down. However, as you will see in the rest of the report, when you consider the complete picture of high-end homes in Tallahassee, this surprising trend starts to make sense.

2023 Ranks First For Luxury Homes Sold

This graph was created from MLS data recording all home sales through February in Tallahassee each year, beginning in 2008 and ending in 2023.

The graph ranks each home price segment from 1 to 16 based upon how well 2023 performed (with a rank of "1" if 2023 had the most home sales down to "16" if 2023 had the fewest number of homes sold of all 16 years).

It's important to understand that each price segment includes all home sales from that price and higher, all the way to the most expensive home sold each year. So the easiest way to read this graph is from the bottom up.

2023 continues the feverish run on all homes, including the very top of the market. Here we see that 2023 is ranked #1 for all homes priced over $800K (that's roughly the top 2.2% of all homes sold). 2023's rank drops to "8th place" when we look at all price ranges.

Homes priced below $50,000 are getting harder and harder to come by, so don't be surprised to continue to see them rank poorly in the future. The takeaway from this graph is that while the overall market declined by more than 16% in 2022, luxury homes did rather well! Let's take a closer look at the very top of the Tallahassee housing market.

Our next graph zooms in on the top 1% of the Tallahassee real estate market.

Tallahassee Luxury Home Sales

This graph provides a great perspective on just how few Tallahassee's million-dollar home sales are. The dashed box highlights these luxury home sales, and there were eight homes sold for $1M or more thus far in 2023, accounting for just under 2% of all homes sold.

The eight million-plus dollar homes sold thus far in 2023 are 50% more than what was recorded in record-setting 2022, and 50% more than those sold in 2021. If you are a luxury homeowner who has been thinking about selling, this graph shows that luxury home buyers are as active as ever early in 2023.

Luxury Homes Are Selling

When we broaden our focus to the top of all homes sold, we find 2023 to be the most active year.

The blue bars measure sales in 2023, and we have determined that homes priced above $800K represent the top 2.2% of home sales by price. 2023 is tops for homes priced above $850K and tied for the previous two years for homes priced above $800K. Clearly, luxury homes are selling better than ever.

The Money That Funds Luxury Home Purchases

People often ask me how individuals pay for these ultra-expensive homes, especially in Tallahassee, which is still primarily a government town and may not seem to have enough job opportunities to support such a high number of costly home sales.

However, the answer lies in the power of low mortgage interest rates. A graph tracking the funding of all luxury home sales from 2003 through 2022 demonstrates that it is the super-low mortgage interest rates that are driving the high-end homes market.

This graph shows the percentage of luxury home buyers who financed their purchases. The solid green line indicates the percentage of people who financed their luxury home purchases each year. With relatively few sales in the top 2%, it's not surprising that the results fluctuate from year to year. However, the red arrow in the graph reveals that 67% of homebuyers who bought homes priced at $900K and above financed their homes in 2023.

It is important to note that interest rates today are twice as high as they were at the beginning of the first quarter of last year. Despite this increase, million-dollar homes are still selling at a faster rate, and the fact that 2/3 of them were financed purchases indicates that the sticker shock from higher rates has been less punitive for higher-priced homes than for lower-priced ones.

Today's mortgage interest rates, though significantly higher than last year's rates, are still about 20% lower than the fifty-year average. With all the new jobs slated to open in Tallahassee, it would not be surprising to see luxury home sales strengthen over the next few years. I was initially expecting higher rates to reduce the demand for high-end homes, but as of yet, that has not occurred.

How Long Does It Take To Sell A Luxury Home?

The next two graphs required a lot of work to prepare and are not merely an automated MLS report. We had to scrub a lot of duplicate (and even quintuplicate) entries in order to find out how long it has been taking to sell luxury homes in Tallahassee, and I can tell you it is a lot longer than what MLS reports show.

This graph displays luxury home sales categorized into two groups each year. The blue bars indicate luxury home sales where the first broker hired by the seller successfully sold the property, while the red group shows those sold with a subsequent real estate company.

It's important to note that high-end homeowners who successfully sold their properties were on the market for significantly longer than unaudited Realtor reports suggest. While the MLS allows users to manipulate listings to make them appear fresh (or new to the market), the reality is that many homes have been listed multiple times.

To provide some context, the MLS reports that the median time on the market for $1M+ homes that sold was 21 days, but our research indicates that it was much longer than that. If we were to consider the red bars in the graph that display the number of days on the market with the second, third, or fourth broker, it becomes evident that if we included the days on the market from all previous brokers, it would take many years to sell a luxury home unless marketed correctly and sold with the first broker hired.

The graph illustrates that sellers who successfully sold their luxury homes in 2022 with their first real estate broker took around five to six months to sell, whereas those who sold with a second or later broker took more than a year to sell, in addition to the months or years they had been listed with previous brokers.

If you plan on selling a high-end home, choosing an honest agent who can accurately evaluate your property and get you sold for the best possible price is essential. Contrary to popular belief, selling a luxury home in Tallahassee does not take several years.

What Luxury Homes Actually Sell For

When we compare the final sales prices of high-end homes to their initial asking prices, we can see that the sellers did not get the amount they expected when they hired their first listing broker. If you read my articles that prove pricing a home correctly delivers the highest sales prices possible, then you know this graph is chock-full of proof that luxury home sellers in Tallahassee have left a lot of money on the table.

The importance of selecting the right luxury home listing agent serves as a cautionary note to future sellers - don't let the highest bid on your home come from your listing agent when they are soliciting your business. You want the highest valuation coming from an interested buyer. Talking to multiple top agents before deciding who to trust with marketing and selling your high-end home is advisable.

As with the previous graph, this graph shows fresh listings in blue (homes listed with a first agent), and stale listings in red (those listed with a 2nd or later agent).

In 2022, luxury home sellers who sold with their first agent received 96% of their initial asking price, while those listed with a second or later agent only received 93% of their first asking price with their final broker. You can bet the final sales price with their final agent was significantly lower than what they asked with their first broker.

In 2023, fresh luxury home listings have sold for 91% of their asking price, while no stale luxury home listings have sold. When selling homes at the top of the market, you must make a splash before your listing goes live. Don't put yourself into a position to become a stale luxury home seller; it won't work out well for you!

If you want to sell a high-end home, choose the agent that spends the marketing dollars necessary to attract ALL potential buyers to your home BEFORE it hits the market. As you can tell from this graph, it does matter.

High-End Homes Sales In 2023 And Beyond

I had expected the luxury homes market to cool in 2022, but the rise in mortgage interest rates has not stopped buyers from financing luxury homes. I suspect our strong local economy has been the savior for high-end home sellers.

If you have a luxury home to sell, call us immediately. We can help you determine the best asking-price for your home, pre-market it to all current luxury home buyers, and help you get top dollar for your luxury home.

Recent Luxury Home Sales

The following table shows all luxury homes sold (priced $800K and higher) in Tallahassee going back to 1991. You can sort the table by any field in the table heading.