Luxury Prices Still Dropping
Despite reports of price increases in the overall housing market, prices in the luxury sector haven’t necessarily followed suit. At least not yet.
In an article published by the Chicago Tribune and posted on RISMedia.com, home owners Mike and Marti Palmer are prime examples of sellers who have lowered their home’s price tag in hopes of attracting a buyer. The Palmers have reduced the price on their Lake Bluff, Ill., luxury home by more than $1 million.
The Palmer’s reduced listing isn’t an isolated case. “Price reduced” signs are being pitched on the lawns of luxury homes across the nation. In Nantucket, Mass., Lee Real Estate is offering a nearly 8,000-square-foot shingle-style home for a reduced price of $8.25 million. Take a virtual tour of this home here.
The Tribune story (here) plays devils’ advocate as it explains the effect reduced luxury home prices have on each audience. Builders are watching as their artworks sells for below market value; buyers are vying for the best deals possible; and lending agencies are hesitant to approve loans on multi-million-dollar properties.
As the number of luxury homes with reduced prices sit on the market without offers, auction houses such as Sheldon Good & Co., are stepping up to the challenge of unloading the pressure of unsold inventory. Michael Fine, executive vice president of Sheldon Good & Co., tells the Tribune that he has taken calls from sellers on the North Shore of Illinois, suburbia and vacation spots.
Grand Estates Auction Company, an auctioneer company that markets luxury properties to local, national and international buyers, is also auctioning high-end listings. Look up its upcoming auctions here.
Builder Farhad Nikamal painstakingly custom-built one residence in Winnetka, Ill., and listed it for $5.5 million in November 2007. Today, the home is being listed for $3.3 million. He tells the Tribune that the drop in list price has cost him nearly $3.9 million.
In addition to reducing list prices, sellers and agents in the luxury market are continuing to sweeten their offerings by adding incentives and bonuses. For the Palmer family, that extra incentive is an extra $20,000 to be put toward the listing’s property taxes. Other incentives sellers are incorporating include cars, boats and home furnishings.
— Lauren Varga
