Ask Adam: Luxury Market Status
This regularly-scheduled sponsored Q&A column is written by Adam Gallegos of Arlington-based real estate firm Arbour Realty, voted one of Arlington Magazine’s Best Realtors of 2013 & 2014. Please submit your questions via email.
Q. I have to admit that my question is more based on curiosity than desire to sell or purchase anytime soon. Can you tell me if the luxury housing market is on the incline or decline in North Arlington?
A. To help me answer your question, I’m going to use statistics for the 22207 and 22201 zip codes. That is where the bulk of luxury, single family home sales take place in North Arlington, and it will reduce the variables in my analysis.
I’ll compare January through June in 2013 to the same time span in 2014. The price range I am looking at is $1 million and greater. I realize an argument could be made for whether $1 million will buy you a “luxury” house these days, but I think it is a fair cutoff.
In 2013 the market experienced the following sales activity:
- Average sales price: $1,402,099
- Sales price compared to original list price: 95.5 percent
- Average days on market: 64
- Number of homes sold: 85
In 2014 the market experienced the following sales activity:
- Average sales price: $1,396,940
- Sales price compared to original list price: 97.2 percent
- Average days on market: 63
- Number of homes sold: 106
You can see some improvement in the sales price compared to original list price, which is a good sign that sellers are getting closer to their asking price in 2014. There is also a 21-unit increase in the number of homes sold in 2014. I think this can be partially attributed to an increase in the number of new homes available, which is helping inventory catch up with demand.
There has been a 33 percent increase in the number of new homes sold so far in 2014. The increase in new home inventory is good news for homebuyers, but the cost of teardowns is rising sharply, which is causing the price of new homes to increase accordingly. With more new homes pushing the $1.8 million and greater price range, we have to be getting close to a tipping point where the pool of buyers able afford these homes dwindles. When that happens, the amount of days homes spend on the market should start trending higher.
Average sales price doesn’t really tell the story, but from what I am seeing, the average price you would pay for a luxury home in 2014 is higher than what you would have paid for the same home in 2013. I would personally categorize the luxury market as an inclining, though it is a gradual incline.
You can follow this link to view the current luxury market listings in Arlington.
The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com.
