Luxury Home Sales Report March 2021

Just 6 Luxury Home Sales In Early 2021

One thing that has changed already in 2021 is the price of homes that find themselves within the top 1% of the market. Last year, that number was $800K, but in 2021, through January, it’s risen to $900K.

This graph is very helpful to show just how few homes are sold in this top 1%. It’s one thing to hear the number, but seeing it against all home sales really makes it clear. There have been just six homes sold for more than $900K, and that’s more than 1% of the 506 homes sold through late February.

Top End Of Market Remains Strong

When we drill down and just examine the top 3% of the market, see a slightly slower start than we saw in 2020.

We’ve counted the home sales for each of the past four Januarys and shown them in the graph above. The yellow bars measure sales in 2021, and we can see that homes priced above $700K represent the top 3% of home sales by price.

January 2021 trails January 2020 from $700K and up, but is tied with last year for $800K and higher, but then again trails 2020 from $950K and higher. I would say based upon early returns, 2021 is still strong but cooling off for luxury home sales.

The Impact Of Rising Mortgage Interest Rates

The following graph tracks the funding of all luxury home sales from 2003 through late February of 2021.

The graph above shows the percentage of luxury home buyers financing their purchases. Even as rates kept setting new record lows in 2020, we observed a rise in the number of people paying cash for a luxury home.

The solid green line shows the percentage of people who financed their luxury home purchases each year. With relatively few sales in the top 1%, it’s not surprising that the results bounce around from year to year. The red arrow shows that 2/3rds of homebuyers who purchased from $900K and higher financed their homes thus far in 2021.

If the trend continues, this will be the third year in a row that the percentage of luxury home buyers using something other than cash has fallen. It’s my belief that the real number will continue to fall, and that makes it very possible we’ll continue to see the percentage fall.

Why does this matter? Well, if the buyers who finance luxury homes can no longer afford to do so due to rising mortgage interest rates, then we’ll see a serious cooling off of the luxury homes market.

With rates still very low, this remains one of the best markets ever for selling a luxury home. Buyers are out shopping. Both those with cash and those who are financing the sale. Take advantage of these conditions and get your luxury home sold before market conditions shift in the other direction.

Market Time For Selling A Luxury Home

The next two graphs require an extensive analysis of the MLS data to produce and cannot be gleaned from an automated MLS report. We did the work to ensure that time on the market and initial asking prices accurately reflect what truly occurred each year.

In the graph above, all luxury home sales are segmented into 2 groups each year. The green group includes all luxury home sales where the home was sold by the first broker the seller hired to sell the home. The black group shows those that sold with a second or later real estate company.

The first thing to note is that luxury homeowners that successfully sold were on the market a lot longer than what unaudited Realtor reports would show. The MLS allows its users to manipulate listings to always appear fresh, but the reality is that many have been listed numerous times. Our report scrubbed the bogus versions and compared the final sales date with the initial listing date.

As you can see in the graph, sellers who successfully sold in 2020 with their first real estate agent took nearly 13 months to sell, while those that sold with a second (or later agent) took just a little less time. This is a rare result.

In fact, 2020 is the only year where sellers took longer with the first agent than they did with the second group. When we look to 2021, the only luxury homes that sold were ones where the first agent sold it.

If you are planning on selling a luxury home, make the effort to choose an agent that will provide an accurate valuation of your home and get you sold for top dollar. It does not take a year (or more) to sell a luxury home in Tallahassee.

Are Luxury Home Sellers Getting Their Asking Prices?

When we compare final sales prices to initial asking prices, it’s fairly obvious most luxury home sellers are not getting the price that they had hoped to receive when they first hit the market.

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

In 2020, luxury home sellers who sold with their first agent received 97% of their initial asking price (after 13 months on the market), while those listed with a second or later agent only received 88% of their initial asking price. This year, luxury home sellers have received 86% of their initial asking price (in just over 6 months of market time).

If you want to sell a luxury home, make sure you choose the agent that spends the marketing dollars necessary to attract ALL potential buyers to your home. As you can tell from the graph above, it does matter.

Future Luxury Homes Market

After seeing a record-setting number of cash buyers in the luxury homes market in 2020, I’m expecting that we’ll find fewer ones in 2021. This means the luxury homes market will rely heavily on buyers who are financing their purchase (and that’s why mortgage interest rates are so important).

Fortunately for luxury home sellers, mortgage rates remain near all-time lows. In fact, 2021 started the year with mortgage interest rates a full percent lower than where 2020 began, so the fact that we saw fewer luxury home sales in January is mildly disturbing. Again, one-month is a very brief period of time so we can’t claim a trend has started at this point.

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 home before the luxury homes market returns to normal.

Recent Luxury Homes Sales

The following table shows all luxury homes sold in Tallahassee going back to 1991. You can sort the table by any field in the table heading.