Conflicting Reports On Luxury Homes

Depending on who you want to listen to, the luxury home scene is either a stagnant buyers market or it is trending upward. The Seattle Times reports on the small number of buyers relative to million-dollar-plus listings.

There are dozens of grand homes — daresay mansions — such as the Westwold in Snohomish County. Yet despite their size, these houses have gone somewhat unnoticed in a real-estate market usually characterized by new subdivisions.

From Woodway to Mukilteo to Lake Stevens, Snohomish County is home to some luxurious estates. With high bluffs on Puget Sound to the west and many lakes, the county has prime real estate for homes that rival those in King County's upscale areas.

There are large homes along the bluffs in Mukilteo and south Everett — former Everett Mayor Ed Hansen has one. There are some grand estates on Lake Stevens, including a 10-bedroom home once described in a real-estate listing as a "castle on the lake."
...
Elizabeth Erickson, a real-estate agent and owner of Gallery Homes in Mukilteo, said luxury homes have always been something of a buyer's market.

Pulling listing data for Mukilteo, where she does most of her business, she said that for the 22 active "luxury" listings in that city, there probably are two or three buyers at any one time. The average time those homes have been on the market is 91 days, she said.

With luxury homes and their amenities, the rich can pick and chose.
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Large homes started popping up in the county at about the time the railroad got here, said David Dilgard, a history specialist with the Everett Public Library's Northwest Room.

People first got rich here through land speculation, Dilgard said. A parcel in what would become Everett became exponentially more valuable when the railroad came to town in 1892.

Many unlucky speculators, however, literally died waiting for the train.

"In this area, speculative nonsense was always kind of the rule rather than the exception," Dilgard said.

I think that quote applies to a lot more than just the luxury real estate market, even if it wasn't meant that way.

From the other side of the fence, John L. Scott himself makes the case that luxury real estate sales are climbing their way out of a post-dot-com slump.

The dominant story in the Seattle/Puget Sound housing market over the past five-plus years has been historically low interest rates leading to record first-time buyers and record home sales—primarily in the more-affordable price ranges. During this time of abundance for much of the housing market, luxury real estate sales were slowly recovering from the residual effects of the dot-com decline in early 2000, which saw luxury home sales plummet in a matter of months, causing values to fall, and a surplus of inventory to flood the market. However, time and a stronger economy have helped heal the luxury market, and 2006 is showing continued signs of improvement for the highest echelon of the Puget Sound housing economy.
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The past few years have been a time of recovery for the luxury market, but the first half of 2006 is appearing to follow the ten-year cycle as described above by Alan Pope. The proof is in the stats which indicate that while inventory continues to rise, so too do the number of buyers and the absorption levels. Sales are definitely strengthening with a 50% increase over year ago totals. However, inventory levels are higher too. In June 2005, there were 1,428 million-dollar-plus homes on the market, compared to 1,839 available properties in June 2006. While inventory is higher, so too is the absorption of this inventory—up by nearly two percent compared to the first half of 2005. All of this points to clear indications that this segment of the market is trending upward.

The largest influence on the local luxury real estate market is the Puget Sound Economic Cycle, which is currently running contrary to much of the rest of the country because our largest corporations, such as Boeing and Microsoft, are hiring—including at the executive level. The Puget Sound region continues to see migration from California and other areas outside of the Northwest because of the economic opportunities and quality of life that is available here. Furthermore, the record sales over the past few years in the more-affordable and mid-priced housing markets have caused a chain reaction of sales that are now being felt in the high-end.

And of course for good measure, Mr. Scott made sure to throw in your daily dose of the "Seattle is Special" mantra. I should trademark that phrase. Maybe come out with a line of t-shirts or something.

Seattle is Special™

(Brian Alexander, Seattle Times , 08.16.2006)
(J. Lennox Scott, RISMedia, 08.17.2006)

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