* Statistics are for Jan. 1 through Oct. 6 of both years and represent the average number of days single-family homes in Massachusetts priced at $1 million and above spent on the market before being purchased. Source: MLS Property Information Network. ** Statistics are for January through August of both years and represent the total number of single-family homes sold for more than $1 million in Massachusetts. Source: The Warren Group.
When it comes to the luxury home market in the Bay State, there are two stories to tell.
The first is the oft-repeated tale of how high-end homebuyers have more properties to choose from and million-dollar homes are taking longer to sell today than they did last year.
The other lies in the numbers: Sales of homes priced $1 million or more have jumped this year, even as the inventory of unsold homes in that price category has grown. Some 1,774 single-family homes priced $1 million and above were sold through August of this year, up about 15 percent from the 1,544 sales during the same period last year.
“There’s a bullishness on the part of buyers, I would say,” said Mark Lippolt, executive vice president and general sales manager for Coldwell Banker Residential Brokerage Central New England. “I think we still remain in a marketplace where residential real estate looks like a better deal to high-wealth individuals than their stock portfolios.”
Still, some sellers and real estate agents are anxious, as they’ve seen the number of for-sale properties priced $1 million or more increase considerably. At the beginning of October, there were more than 2,000 properties in that price range listed for sale, compared to about 800 homes in January 2004, according to Lippolt.
There is currently over a year’s worth of homes on the market, compared to last year when there was 8.6-months’ supply of homes. “There is justifiable concern among sellers because they have so much more competition than they did 18 to 20 months ago,” said Lippolt.
In some cases, sellers are reducing their asking prices in order to attract offers. Of the 43 homes priced $1 million or higher that were listed for sale in Dover as of last week, at least half of them had some type of price adjustment in the last 30 days, according to Jay Hughes, broker-owner of Dover Country Properties.
Some homes have been on the market anywhere from three to five months, Hughes said. As a result, sellers are becoming more willing to negotiate on price. “Sellers are willing to listen more carefully, and depending on their motivation for selling, may be quite accommodating,” he said.
Pricing is a major factor in the luxury home market today, according to Hughes, and buyers who think a property is overpriced will bypass it. “The educated buyer who perceives value will make a bona fide offer,” he said.
David S. Drinkwater, president of Grand Gables Realty Group in Scituate, said sellers are becoming more realistic in their price expectations. “I do think that sellers are starting to realize in this marketplace that the appreciation rates we’ve been seeing Â… can’t continue,” he said.
Boom Towns
Despite the fact that real estate professionals have been noticing a softening in the high-end market, properties priced $1 million or more are not taking longer to sell. In fact, statistics from MLS Property Information Network show that the average days on market for homes in that price range was 87 days from January through the beginning of October, a drop from 92 days during the same months a year ago.
Luxury home sales are being driven in large part by baby boomers who have built up equity in their current homes, according to Drinkwater. Some of them are opting to trade their large suburban family homes for some of the upscale new condominiums being developed in Boston’s downtown neighborhoods, while others are seeking waterfront residences in South Shore communities like Cohasset and Scituate, he said.
About 150 out of 351 cities and towns in Massachusetts had single-family home sales of $1 million or more during the first eight months of this year, according to The Warren Group, parent company of Banker & Tradesman. The majority of the million-dollar-plus single-family home sales this year have been concentrated in communities west of Boston like Newton, Wellesley, Weston, Brookline and Lexington. Of the 1,774 single-family homes priced $1 million and above that were sold from January through August, almost a third were in those five communities.
Newton led the pack with 176 single-family home sales in that price category, including a 6,500-square-foot contemporary-style residence in West Newton that sold for almost $4 million in June.
In Wellesley, there were 154 million-dollar home sales, including a 16-room mansion on three acres that went for $6.47 million at the end of August.
Nantucket had 126 such sales, with one property on the island fetching $15 million in January – the highest-priced residential sales during the first eight months of the year, according to The Warren Group. The property, a three-bedroom ranch on Polpis Road, included 15.5 acres.
As home prices have continued to appreciate in the Bay State, sales of $1 million-plus residential properties have climbed as well. A decade ago, there were only 175 sales of single-family homes priced $1 million and up, but last year, a total of 2,350 single-family homes in that price range were sold, according to The Warren Group.
A $1 million home is more commonplace today than it was five years ago, acknowledged Lippolt, and general appreciation has helped push homes priced in the $800,000 range just two years ago into the $1 million-plus category today.
The bulk of million-dollar homes sold in Massachusetts so far this year went for less than $2 million. Some 1,248 single-family homes priced between $1 million and $1.9 million were sold from January through the beginning of October, according to MLS PIN, compared with just 173 home sales that fell in the $2 million to $2.9 million price range.
And homes in the lower price category are being purchased at a faster pace. Lippolt said the current absorption rate for properties priced under $1.5 million is 10.89 months, while there is a 30-month absorption rate for properties priced between $3 million to $4 million.
