Courtesy of Dallas.culturemap.com
By Robbie Briggs, CEO of Briggs Freeman Sotheby's
I am pleased to bring you the latest edition of the quarterly Robbie Report, containing firsthand real estate information from a global group of extraordinary brokers that I am privileged to know through my association with Sotheby’s International Realty. The global real estate market steps into 2013 with a more confident stride. The economic gloom of the last 12 months or more appears to be lifting.
The most obvious sign of revival has been the rally in equity markets, with some bourses touching their highest levels since 2008. A last-minute New Year tax agreement in the U.S. has helped spur the rise (although it gives only temporary respite from the “fiscal cliff”), and it has been reinforced by more encouraging economic news. In China, evidence is growing that the recent slowdown was a temporary pause and that the economy is gaining momentum again.
Even the Eurozone, which has presented the gravest threat to the global outlook over the last two years, appears to be on the mend. Economic data continues to be downbeat, but the evidence from bond spreads is that the threat of a currency breakup is steadily receding.
The Eurozone is certainly not out of the woods, and many debtor nations face another challenging year. But, although caution is still in order and any improvement will be slow, the major event risks seem to be reducing, and conditions are falling into place for recovery.
As you will see from the information in this report, the first quarter of 2013 was a positive one for luxury residential real estate.
United States
Dallas
Demand for real estate has been strong in the first quarter of 2013. Year to date, our company volume is up more than 46 percent compared to this same time frame last year, which was a record-breaking year for our company. Our unit count (closed units) is up more than 53 percent compared to this same time frame last year.
Pending sales and closed sales are up, and days on the market are down by more than 20 percent. Our housing supply is low — almost 20 percent below levels in 2012.
New construction is on the rise and will soon become a factor in the sale of homes. Building permits are up more than 25 percent, homes under construction are up more than 18 percent, and completions are up more than 32 percent. Briggs Freeman Sotheby´s International Realty had its best week of business ever at the beginning of April, with more than $118 million of sales transactions closed.
All indications are that we will have yet another record-breaking year. We are seeing multiple offers on properties that are well-priced and in good condition. We are having some appraisal issues as our market trends upward with the comparable sales data lagging behind.
Miami The South Florida market continues to show progress. Broward County overall showed inventory absorption with an 18 percent decrease in the number of properties for sale over the first quarter of 2012.
Sales showed a slight increase, while prices rose on average 13.7 percent. The Miami-Dade overall outlook is similar, with a slight uptick in the number of sales, while prices jumped 15.2 percent.
Turning to the luxury market, residential properties in the $1 million to $5 million range showed sales increases around 30 percent over the same quarter last year, outperforming the $5 million-plus market and the $500,000-$1 million market, which posted modest increases.
In Miami-Dade, the single-family home market jumped 40 percent in the number of homes sold, while prices increased 7.5 percent. The condo market posted gains as well, with the average price per square foot now $721.
The 33160 zip code area, which includes Sunny Isles and Aventura, continues to be the leader in the number of units closed, posting a whopping 72.7 percent increase in sales over the first quarter last year, while prices increased 8.3 percent.
The Coconut Grove/Miami/ Brickell market also posted big increases. The average price per square foot is hovering at the $500 mark.
In Broward County, the condo market in the $1 million-$5 million range increased a dramatic 85.7 percent, sounding the signs of real recovery in that market, where prices overall are still lower than most Miami-Dade markets.
The increases in this segment of the market show the return of the working wealthy, which have been mostly absent from the recovery so far. These buyers join a good number of foreign buyers still in the market primarily from Brazil, Venezuela, Canada and Russia.
The emergence of financing in this market also contributes to the increases. Although the majority of sales are still cash, financing to these well-qualified buyers is available from a variety of lenders.
Palm Beach
Starting in December 2012, the Palm Beach residential market has literally exploded. There were 23 residences sold in the month of December alone, with a single buyer purchasing four adjacent parcels for approximately $130 million.
Sold volume of single-family residential properties on Palm Beach Island increased from $57.6 million in the 2012 first quarter to $135.9 million during the first quarter of 2013 — a 135 percent increase. Similarly, the average sale price leapt 28 percent from $3.2 million to $4.1 million.
Many agents believe that individuals and, in some cases, fund managers are looking to real estate to diversify their investments. It appears as though the smart money is counting on real property to maximize their returns.
Boston
Offers are coming in above the asking price. This trend is a fairly new phenomenon for Boston. In fact, back in the beginning of 2011, Boston condominiums were trading for 96 percent of their asking price, which was 92 percent of their original asking price.
This indeed is impressive and encouraging for sellers, to say the least, although in today’s marketplace, activity has lessened the list vs. sale differential. During the early months of 2012, when the market was beginning to positively turn around, sellers were accepting offers that were 97 percent of the final asking price, which was 94 percent of the price when the properties were first put on the market.
Thus far in 2013, this accelerating business has only become more dramatic. Sold properties are now closing at 99 percent of the asking price, which is still 98 percent of the original asking price.
This undoubtedly is leaving little to zero wiggle room for those individuals looking to negotiate and purchase property on their own terms. Sellers simply are not as desperate as they were in years past, and with the peak demand to buy Boston property among the populace, sellers can literally pick and choose at multiple offers with pleasure.
Subsequently, buyers’ agents have been forced to urge clients to put in an offer of at least the asking price — if not more — and this is happening more frequently.
New York
New York City is currently the No. 1 market in the world, taking the spot from London, according to the latest Knight Frank Report. The market is booming at the top end, with lack of inventory being the biggest issue. Record prices are being paid for co-operatives and condominiums.
Downtown is very hot; new condo 150 Charles sold very quickly. Most overseas buyers purchase condominiums. Apartments needing renovation are more difficult to sell.
Chicago
The market has been experiencing a severe lack of inventory, a trend that started in the fall of 2012. Multiple-bid situations are quickly pushing prices higher and making appraisals an issue. New construction is creeping back into the market, and sources anticipate brand-new rental towers will choose to go condo based upon buyer demand.
Washington, D.C.
Luxury buyers are back, with a 24 percent increase (Q1 2013 vs. Q1 2012) of home sales over $1 million in the Washington metropolitan area. Homes are selling quickly, with 33 percent of $1 million-plus sales in Washington, D.C., on the market for less than one month.
There is an inventory shortage at all price points. Today, only 6,000 homes are for sale in the entire D.C. metro area, down from an April 2008 high of more than 25,000 homes.
Greenwich, Connecticut
The market has definitely picked up, with single-family home contracts up year-to-date by 7.8 percent. The $5 million-plus-dollar market (off the water) is actively trading. Quite a bit of old inventory is under contract.
Bidding wars, which seemed a thing of the past, are now popping back up. New construction starts are up, including two new homes in the $8 million range. Confidence (in value) for Greenwich properties is at the highest level in four years.
Hamptons
The Hamptons market is heating up: The warmer temperatures are bringing both buyers and renters, and there is a shift toward a seller’s market for the first time since 2006.
Bidding wars are happening in all segments, especially the properties in the lower ranges (under $2 million). Generally the market is extremely active up to $10 million, with little quality inventory from $5 million-$10 million.
Seattle
The Seattle area is witnessing a dramatic housing market rebound since completing its post-recession correction during the first quarter of 2012. Major employment growth from retail titan Amazon.com — which alone has sparked more than 3 million square feet of new office space demand in downtown Seattle — coupled with regional expansion at Fortune 500 companies such as Boeing, Microsoft, Starbucks and Nordstrom, is drawing thousands of relocating professionals to the Emerald City, including a significant group from China.
At the same time, improved liquidity in the single-family neighborhoods surrounding the job centers has allowed empty-nesters, many of whom have been unable or unwilling to sell in recent years, to move into condominiums and purchase second homes in other markets. However, given the credit crunch that has canceled or deferred all new for-sale projects since 2007, there will be effectively no new deliveries of in-city condominiums until at least 2015.
Demand has risen much quicker than supply. This has caused a seller’s market with less than two months of inventory available.
Teton County, Wyoming
Total sales volume soared in Q4 2012, making 2012 the best year since 2007. As the second home market continues to recover, Wyoming as “America’s Wealth-friendliest State” (per Bloomberg) continues to attract buyers from out of state — namely California, New York and Illinois.
Teton County local economy remained strong in 2012 due to an increase in visits to nearby national parks (Yellowstone and Grand Teton), as well as the addition of nonstop service from Newark to Jackson.
There is a renewed interest in raw land (less than 3 percent developable). Total sales volume in Q1 2013 was up 47 percent YOY with residential sales up 67 percent. Total units sold in Q1 2013 were up 34 percent YOY. Average sales price of single-family homes is up 28 percent YOY, and overall inventory is down 17 percent.
Telluride
Since the first of the year, tracking closely with the sunset of lower capital gains and tax rates, we saw a substantial decline in sales activity in Q1. These conditions have finally begun to thaw with a flurry of showings and contract activity in late March and early April. Buyers continue to be North American in origin, with some Latin American buyers mixed in. Particular concentrations of buyers continue to be from Texas, New York, Florida and California.
There have been a growing number of inquiries from wealthy Californians interested in exploring relocation of their primary residence to their Colorado second home to flee the growing tax burdens California has instituted.
Aspen
December 2012 was, by far, the best in more than four years, followed by three straight months of lackluster figures.
Buyers are mainly from the United States. The international crowd has picked up some in the past few years, mostly from the UK and Australia, but the majority of buyers come from Texas, California, New York and Florida. There has been an increase in buyers from the Midwest.
Oahu
The first quarter of the year has produced outstanding activity. All key market components show signs of a strong environment.
A review of activity for single-family homes shows a strong market and impressive growth in all categories of market statistics. The first quarter saw an increase of 6.9 percent in the number of closed sales, with the quarter ending with an increase of 39.5 percent in pending sales compared to the same time last year.
The month of March ended with particularly significant results when compared to March 2012. The median sale price for March 2013 was $640,000, an increase of 2.4 percent over last March, while median days on market dropped 50 percent. It is essential to note that the number of active listings in March dropped 22 percent from the same time last year, leaving only 2.4 months of available inventory.
The condominium market also performed extremely well. There were 411 closed re-sales in the month, an increase of 21.6 percent coupled with an increase in the median sale price of 9.1 percent, at $340,000. Meanwhile, the month saw a decrease of 35.9 percent in days on market. Overall, the month ended with 2.7 months of inventory compared to 4.5 months last March, a decrease of 40 percent.
To summarize, market factors show a healthy and active market, and all indications are that 2013 will be a successful year.
Other Markets
Toronto, Canada
Compared to the first quarter of 2012, sales in Q1 2013 were down by 14 percent, due to a lack of inventory. Average sale prices were up by 3.8 percent, compared to the same time period last year.
There is a severe shortage of properties to sell; therefore the market is seeing multiple offers on almost anything for sale — excluding condos — up to $1.5 million. Condo sales are down, while the inventory of new condos is high and increasing. We currently have 140 new condo buildings under construction.
In particular, the market for new condos in the top tier (over $2 million) has experienced a significant and sustained softening of demand.
French Riviera
The first quarter of the year is always a quieter time for the French Riviera; however potential buyers are arriving from global locations, including many from Eastern European countries. Concerns over new French taxation laws continue to concern international buyers and sellers in the region. Also, recent economic news across Europe and the strength of the Eurozone markets means that potential buyers and sellers need the best fiscal advice from key international partners offering support to buyers and sellers.
Opening sale and the final sale prices vary by between 10 and 15 percent, and more than 80 percent of buyers are international, i.e., non-French.
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