Orange County Housing Report: The Luxury End is Back, But Tread Carefully!
Category : Laguna Beach Real Estate
2015 marks the year that the high end fully recovered posting the highest
number of $1 million plus home sales since 2005.
The Luxury Market: one-third of all homes that are listed “for sale” are over $1 million.
Today, there are only 205 total foreclosures and short sales on the active listing market in Orange County. In contrast, there are 2,040 homes priced at $1 million and up. In October, there were 348 sales at $1 million and up; yet, there were only 86 closed distressed sales. The distressed market is down to 2007 numbers, edging closer to pre-recession days. It’s almost no longer worth mentioning. On the other hand, the luxury market is back with a vengeance, posting numbers in 2015 that have not been seen since 2005, one of the hottest years in Orange County real estate.
For the luxury homeowner, this is great news. But, don’t misread this. Just because the luxury housing market’s numbers are back, it is not a pass to place a home “for sale” and have instantaneous success. Instead, it’s a tough market with tremendous competition among other luxury sellers. The number of buyers that can afford to purchase in the higher ranges is much more limited, so it takes a bit longer for realistic sellers to find success.
Luxury homeowners are much more apt to overprice their homes. Yes, overpricing is rampant in every range, but it is at an epidemic level in the upper ranges. In taking a closer look at the 348 closed sales at $1 million and up, 83% had to reduce the asking price at least once in order to find success.
The biggest issue in the luxury market is that many homeowners place their homes on the market with expectations based upon articles written about the feverish pitch of the Orange County housing market for the past few years. They hear about multiple offers and closed sales higher than their asking prices. Homes are seemingly selling about as fast as they come on. But, you have to be careful in what you read. There are price ranges that are extremely hot, but they are primarily referring to homes priced between $250,000 and $750,000. That range accounted for 72% of all closed sales in October. The luxury price range only accounted for 14% of all closed sales.
Luxury sellers quickly find out the hard way that their market is vastly different than the Orange County housing market that they read about. Homes don’t necessarily fly off the market.