Bucking the trend?
I define the luxury market somewhat arbitrarily as anything listing for $700,000 or more.
Amidst all the terrible economic news it might be surprising to learn that the luxury home market in Durham may have held its own during the 3rd quarter of the year…or, at least, it hasn’t gotten any worse. During the quarter, 12 homes listed for over $700,000 sold, compared with 8 in 2007. 6 more are pending. Year-to-date there have been 30 sales, which is one more than during the same period in 2007.
While Durham stayed even, year-to-date sales of luxury homes in adjacent counties slipped. Orange was down 42% (81 sales this year and 139 last year,) Wake was down 14% (352 this year and 410 last year) and Chatham was down 43% (28 this year and 49 last year.)
Declining inventory but not from sales
During the 3rd quarter 27 luxury homes were newly listed or relisted in Durham. In spite of this, inventory, or the number of homes in this category, declined from 86 to 77. If you do the math this means that 24 previously listed homes were withdrawn or the listings expired without being sold. In a less than robust market, you might expect that owners with no great urgency to sell might withdraw them and wait for conditions to improve before relisting.
Where are they?
Of the 77 listings, 20 are in Hope Valley (including Surrey Green), 16 are in Treyburn, 9 are in Croasdaile, 6 are in the Oaks, 4 are in Trinity Park/Hillandale/Watts Hospital, 4 in Maida Vale, 2 in Meadowmont, and 1 each are in Southpoint Manor, Duke Forest and Forest Hills. 13 are not in a subdivision or neighborhood. To see details on any of these properties, you can use the BestHomePro search tools on the Lux Neighborhoods page or DurhamLuxRE.com. I’ve set up searches there for each of the key luxury neighborhoods in Durham. You can use these links to search anonomously any time you want but, please be my guest and register at the search site and follow developments in any neighborhood you like by saving a search and turning on the notifications feature. It’s a good way to track developments in a market as they happen and it will not generate spam from me or anyone else.
Of the homes sold or under contract, 4 are in Croasdaile, 2 each in Treyburn, the Oaks, Maida Vale, and Hope Valley, and 1 each in Forest Hills, Duke Forest, Southpoint Manor, and Meadowmont. The final one not in a subdivision is on Glenn Road.
Price cutting seems to be the primary marketing strategy
Of the 77 luxury listings currently on the market, 39% or 30 have had price reductions ranging from $10,000 to almost half a million. Of the 18 homes that sold or went under contract during the quarter, 11 had price reductions ranging from $25,000 to $400,000.
An alternative to price cutting…raise buyer agent compensation.
Trenton Road Contemporary - $1,199,000
It is my contention that one of the ways to make a listing competitive without necessarily reducing the price is to offer an attractive commission to the buyer’s agent. This gives the buyer agent with a qualified buyer in tow extra incentive to show the listing. (There is more about this strategy in the Luxury Marketing Report. Get it here or from the link in the sidebar on the left.) In Durham we are actually beginning to see the use of this strategy some. Of the 77 luxury homes on the market, 39 offer the buyer agent 2.5% of the sales price. 5 offer less than that with the lowest 1.9%. 30 offer 3% which used to be the standard. Two offer 3.5% and 2 more offer 4.0%. Two of them are new homes in Southpointe Manor. One is a unique contemporary and one is offered by a commercial broker for its development potential. The contemporary is offered by Anne Carpenter of Howard Perry and Walston for $1,199,000 and is pictured above. For more information about it click here.
This is something to try as an alternative to lowering the price of a listing and can actually net the seller more. Some sellers are uncomfortable with this because they already feel like agents make too much money on these high end properties. Some listing agents are reluctant to try it because it can mean that the buyer agent will make more on the transaction than they will. Personally, I have no such reservations. If it gets my client’s property sold, any compensation is better than no compensation.
More information All this information is drawn from data available to any REALTOR with access to the Triangle Multiple Listing Service and does not include transactions that did not involve a REALTOR. If you have questions about any of it please don’t hesitate to call me at 919-819-6666 or email me a jay@jayzenner.com. More information about the DUrham luxury home market can be found at my blog, DurhamLuxRE.com.
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