Luxury Homes Report January 2021

Luxury Home Sales Post Record Year

If you were concerned that the pandemic would slow the luxury homes market, the graph below makes it clear it did not.

As we forecast in our most recent luxury homes report, 2020 finished strong and each price point above $800,000 posted record-year results.

Why Were Luxury Home Sales Strong In 2020

One might think that luxury home sales were strong due to historic-low mortgage interest rates, but that was not entirely the case.

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.

In 2020, 13 buyers paid cash for their luxury home, representing 25% of all luxury purchases. This was the most cash purchases of luxury homes ever recorded.

This suggests that it is more than just low mortgage interest rates moving the luxury homes market. Luxury home sellers should take note.

This is 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 swing in the other direction.

How Long Does It Take To Sell 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 8 months to sell, while those that sold with a second (or later agent) had an estimated sales date more than 14 months after their initial listing date.

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.

How Much Are Luxury Home Sellers Receiving?

When we compare final sales prices to initial asking prices, it’s fairly obvious the 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 94% of their initial asking price, while those listed with a second or later agent only received 82% of their initial asking price. That extra 12% is a six-figure penalty for choosing the incorrect first agent!

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 matters!

Future Luxury Homes Market

It is likely we will see a decline in the number of cash buyers in the luxury homes market in 2021, as last year’s record-setting figure took many of the prospects out of the buyer pool. So that means we will be relying heavily on those buyers who finance their purchases.

Fortunately for luxury home sellers, mortgage rates are near or at all-time lows. In fact, 2021 will start the year nearly a full percent lower than where 2020 began, so we expect demand for luxury homes to remain strong for the foreseeable future.

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.

Luxury Homes Sales In Tallahassee

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.