Posted by Maureen Loeb, REALTOR® with RE/MAX Realty Affiliates
Much attention has been given to the slowing real estate market in Northern Nevada. However, upon closer examination, it’s apparent that the luxury home market has remained stable. The following graph show the number of homes priced at $1 million plus sold by quarter for 2006 and 2007. A total of 143 million dollar plus homes were sold in 2006 averaging 11.9 per month. 107 millions dollar plus homes have been sold in 2007 for the 1st three quarters in 2007 averaging 11.9 per month. The price per square foot has increased 5.5 % from an average of $329.56 in 2006 to $347.86 YTD in 2007.
There are several factors contributing to the luxury home market stability:
· Most million dollar plus homes sold are custom homes thus reducing the impact of the Principle of Substitution. Because of identical floor plans and similar upgrades, semi-custom/production homes are viewed more as commodities and can be more easily substituted for one another.
· Many of the million dollar+ homes sold have wonderful views which still attract buyers.
· Million dollar plus buyers are not impacted by the credit crunch as much as lower priced home buyers. Many are paying cash for their homes.
Even with the number of homes sold remaining stable, and the price per square foot increasing, all is not well with this market segment. Because of price appreciation over the past several years, more homes offered for sale are now falling within this price ban. Currently there are 355 homes in Washoe County priced ? $1 million. At an absorption rate of 12 homes being sold per month, this equates to almost 30 months of inventory (2 ½ years!).