When there is a minimal downturn in a real estate market, many times the luxury market isn't affect much, if at all. There's a portion of the population with enough resources in reserve to weather these market dips and hold strong to their prices, not needing to sell unless they get the price they truly want for their homes.
The current downturn appears to have pushed past that wall of invincibility in Seattle waterfront and luxury home sellers' minds, and we're starting to see some significantly reduced luxury home listings and final sale prices. The trend is happening nationwide, as evidenced in this Wall Street Journal article. While there are certain unique properties that will always hold their values, the total luxury home sales have been so dismal for the past two years that many sellers have gotten realistic. They're dropping prices, accepting lower offers, and negotiating whatever it takes to move on.
While many homes are still selling at 5% off list price, we're seeing more and more remarkable recent moves:
A property on the South end of Medina which was listed for $33.9 million in 2008 and 2009 has come back on the market at $26.8 million. This drop of around 20% correctly reflects the overall trend of the Seattle market over the past 2.5 years, but the sheer size of the numbers make it significant.
A home on the North end of Hunts Point, while listed at $15.8 million, ended up closing for $11.28 million. The 28% discount is far higher than we've seen in quite a long time. Just a few steps away, an undeveloped piece of land on the tip of the point has lowered its price from $22.8 to $19.68 million.
A waterfront Madison Park home started out at $14.6 million in early 2009, and ended up selling for $10.6 million at the end of the year.
One of my clients purchased a home on the Eastside for $5.4 million late last year. It had dropped over the previous two year from being listed at $7.9 million all the way down to $6 million before we started negotiating.
These are just a few homes, but they're showing an interesting new trend in the upper luxury market. We're accustomed to seeing these homes sit on the market for one, even two years, with no price drops. The going line is "We won't negotiate against ourselves." In other words, make us an offer, but we're not dropping the price on our own.
Not so much lately. Buyers are more savvy, do more research on their own online, and really compare properties before ever setting foot in the door. More luxury home sellers are becoming "competitive" with pricing, while it used to be all about the property. The more open information about real estate becomes, the more open these sellers are becoming in response. Remember when "pocket listings" were the majority of the high-end luxury home market?
This isn't to say the entire market has gone that direction, only that it's a trend. If the luxury market in Seattle recovers quickly, we could easily see a slide back to the old model of selling these homes. The highest income-earners and home buyers in the Greater Seattle are a much more egalitarian, technology-minded, and even younger group than you'll find in almost any city around the world. It's only fitting that they break a few more molds.
Sam DeBord is a licensed real estate broker with SeattleHome.com, a division of Washington State Realty, LLC. He is a member of the Seattle-King County Association of Realtors and a Green-Certified Pro.
Source: Individually compiled NWMLS statistics. The NWMLS database and statistics do not include many new construction pre-sale units, private sales or auction sales. These statistics were not compiled or published by the Northwest Multiple Listing Service.
Sam DeBord and Brian Wiegand
SeattleHome.com - Washington State Realty - (206) 552-8820
Real Estate Brokers, Realtors, Green Certified Pros
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