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What’s Driving the Luxury Housing Rebound?

The biggest drivers behind the rebound in luxury home sales: Low mortgage rates, rising consumer confidence, cash buyers, and international buyers, according to real estate professionals and brokers who spoke at the recent National Association of Real Estate Editors conference.

However, with low mortgage rates, some luxury home buyers are financing their home purchases. For example, some buyers who traditionally would pay cash are instead securing 2.25 percent interest rates and 10-year loan terms.

Among the features that are luring luxury home buyers are outdoor kitchens boasting spacious patios and home spas. These buyers are also drawn to “properties with a story—say, a famous former owner or a renowned architect,” The Wall Street Journal reports.

With home prices gaining momentum in the luxury market, the U.S. will soon see a record-breaking $200 million listing. The record currently is believed to be a $190 million listing in Greenwich, Conn. However, many of the highest priced listings tend to be more for attention sake, and often end up selling for 50 percent or 60 percent of the original list price.

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Phoenix Luxury Market Report Summary

Price in the luxury real estate market in Phoenix typically go up during the winter season and go back down during the summer months. Since November 2012, the average sold price has increased approximately +14.5% (up from last month), the average days on market have decreased approximately -33.3% (down from last month) and the number of transaction has increased approximately +67.1% (up from last month). The average price per square foot is approximately $307 PSF, average days on market is 156 days and 117 transactions last month. The Luxury Market Index shows the real estate boom from 2004 to 2006 created a great deal of demand in the market and the number of transaction is back down to the 2003 to 2004 levels.

As you can see from the fourth chart above, the luxury market is showing signs of improvement. The average price per square foot is increasing; the average days on market are decreasing and the number of transaction are increasing. These are good signs from the market but we will have to see if this improvement continues during the summer months. The improving market is contributed to consumers sentiment that the overall economy has recovered and lenders are becoming more willing to issue jumbo loans to qualified buyer.

Trying to “time the market” for the perfect time to buy is nearly impossible but there is no better time than now to purchase. Real estate prices are at an all time low and the economy is starting to see signed of improvement both in terms of real estate prices and the overall economy. Time to buy is NOW!! Give us a call to discuss your best buying strategy, TODAY!!

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Office: 480-213-5251

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