After years of lackluster sales, an overabundance of inventory and falling prices, metro Atlanta’s luxury home market is in recovery mode.
It’s been hampered a bit by the economic downturn; in fact, it’s fairly flat, but real estate experts say the signs are everywhere that the market is improving.
Prices are recovering, but they are at a range where buyers are now able to go into prestigious areas where they may have been previously priced out, said Charlotte Sears, president of Coldwell Banker Residential Brokerage in Atlanta.
She cited a survey her company did where one-third of wealthy consumers said they were considering a home purchase in the next 12 months, a big thumbs-up, she said, for confidence in the real estate market.
“There has been a lot of pent-up demand for the luxury market, but many have sat on the sidelines and waited,” Sears said. “Pricing of the properties has also been better, which accounts for higher unit sales this year than last year.”
The latest quarterly statistics show that properties priced at $1 million and above that did not have a price reduction — rare in the market — sat on sale for an average of 26 days. If there was a reduction, the average was 309 days, said Shaun Rawls, of The Rawls Group – Keller Williams.
A house sitting on the market for a while is not unique to the luxury market, but Rawls notes that sellers get punished if they hit the market at the wrong price.
“It’s like buying bread at the grocery store: You want the soft bread that lasts a while,” he said. “In any price range, properties get stale fast. A year ago, if a home was on the market for a year, you could blame it on the economy. Now, a luxury property still on the market after a couple of months, and people are wondering what is wrong with it.”
Inventory in the market is at about 11 months, and that continues to go down in the $1 million-plus range. A few years ago, there had been over three years of inventory, Rawls said.
The market experienced a 0.5 percent increase in the number of homes sold in the second quarter, and closed sales in the upper tier — homes priced at $750,000 and above — are up 45 percent against 2012, David Boehmig, president and co-founder of Atlanta Fine Homes Sotheby’s International Realty, said.
“Compared to the markets of 2009 and 2010, we’re experiencing a wonderful recovery,” Michael Rogers, president of Dorsey Alston, Realtors said. “In the heart of the recession, the issue could be simplified to the fact that the market was comprised of all sellers and no buyers. Today, there are more buyers than sellers.”
There was one quarter in the height of the recession that Rogers recalls looking at the number of transactions greater than the $2 million price point and seeing zero sales. In the same price bracket today, inventory numbers have been consistent during the past two years, but he is encouraged by a modest increase in the number of homes sold.
“While the intersection of the supply and demand curves is not exactly where I would like to see it, we are still experiencing an infinitely healthier market today than we did three years ago,” he said. “Home values have risen throughout the past 24 months, and our intown markets, particularly those under $1.4 million, have felt the demand outweigh the supply.”
Nevertheless, the shortage of listings is a bit of a conundrum.
One of Rogers’ theories is that the market is experiencing a bit of a “chicken and egg” issue. Some sellers are waiting until they find a home they are interested in purchasing before they list their home on the market.
As a result, there are sellers in the $1.75 million to $2 million range having difficulty finding sufficient downsizing options, while sellers in the $800,000 to $1.1 million range don’t want to sell until they know they have identified a larger home. Both demographics are waiting for the other to make the first move, and the demand continues to outweigh the supply.
Boehmig sees the Buckhead and Sandy Springs areas still leading the areas where buyers are seeking luxury homes, but includes Midtown and Alpharetta on the list for contributing to the growth this year.
Sears expands that area even more to include areas of Sugarloaf in Duluth, Johns Creek and Gwinnett County. She isn’t seeing as much new construction in the market, but is seeing some infill in newer areas like St. Ives Country Club in Johns Creek and St. Marlo Country Club in Duluth.
She is also seeing tear-downs happening around the city where $1 million homes are being constructed.