The Rush To Real Estate: What’s Happening At The High End?

Written by Posted On Friday, 28 August 2020 05:00

“You can fry an egg on the suburban single-family home market!”

So observed Abio Properties Realtor Larry Jacobs, a life-long East Bay resident in Northern California - and his graphic observation says it all, as low inventory and intense competition continue to turn up the heat on the real estate market in most areas of the country. 

But with demand quite logically strongest in the entry-level to mid-range sector of the market, what’s the fervor like at the upper end?  Are the wealthy as keen for greener pastures as so many less affluent consumers? 

“I’ve never seen this kind of demand,” said luxury home specialist Jacquelyn Foreman, a 20-year veteran agent with Coldwell Banker United Realtors in Austin, Texas, where ‘high end’ begins at $1 million but can go north of $15 million. 

“With inventory tight,” Foreman said, “an attractive $2- or $3 million home can go under contract before the photographer can even get there to take photos.  People are searching for these homes online and flying in on private planes to snap up properties in and around Lake Travis or any of Austin’s beautiful man-made lakes.”

For the affluent, noted Foreman, for whom working from anywhere is almost always a doable option, it’s rarely about price. “It’s about space, more land, a private getaway, a respite from city life.”

Carolyn Grossman, a career agent with Allen Tate Realtors in Charlotte, sees much the same dynamic in North Carolina where, in many cases, $1 million will buy a three-story, 4,500 square foot home with a porch, a pool, and a sun room.

“Home has become a haven,” Grossman said. “With a vacation in Italy not likely any time soon, home is now the oasis. Buyers are coming in droves to enjoy the urban-suburban Charlotte lifestyle. Everything is moving quickly, and homes listed at just under a million are literally flying off the market.”

The traditional notion of empty nesters downsizing has been turned on its ear, noted Marc Castillo, Coldwell Banker Realty in Atlanta, Ga.

“I’ve never seen so much high-end traffic,” said Castillo. “With college kids back home, and Grandma snatched back from coronavirus-prone assisted living facilities, there is a desire for more space, not less, and in park-like, private settings with all the amenities.”

Multiple offers and bidding wars are commonplace, he said, on properties priced between $2.5 to $3.5 million. “When the right property comes on the market, nobody wants to be left holding the bag.”

Some are noticing a decided flight from both coasts toward more-affordable middle-America.

“The wealthy are aware how much more $1 million or $5 million can buy in Arizona or North Carolina than in New York or San Francisco,” said Mark Pessin, chief learning officer for Realty ONE Group and designated broker for the company’s San Diego office. “These buyers have ready cash and/or easy access to loans at today’s rock-bottom rates.”

Even in San Diego, he noted, where mild weather and miles of white sand beaches belie big-city convenience, a $1.5 million home recently drew 26 showings and nine offers in a three-day period, and sold for over its asking price.

Buyers who come in with no contingencies are also waiving inspections and appraisals, he said, and ratcheting up their offers via escalation clauses in an effort to walk away with the winning bid.

“Inventory in the luxury space has never been particularly high,” Pessin observed. “But the scarcity of inventory during this pandemic has absolutely intensified demand.”

It comes as no surprise that prices are rising.

“In-demand properties in and around Austin routinely sell for $50,000 or more over their asking price,” said Foreman. “It comes down to what the market will bear.”

An East Bay home in Danville, noted Jacobs, sold recently in 48 hours for $150,000 over its $1.7 million list price.

Busy agents are besieged by frustrated clients hoping to get first dibs on a suitable property. 

“My phone rings constantly,” said Foreman. “Buyers anxious to get a first showing want to know if I’ve heard of anything new that might be coming on the market.”

And the days are gone when cash was king, said Grossman.

“Cash buyers cannot expect to scoop up any bargains these days,” she said. “Sellers want to get the best price they can. They’ll take a high offer with healthy down payment anytime.”

At the same time, properties at the zenith of the luxury market are less prone to the buying frenzy.

“Homes listed at $10 million or more are seeing more days on market,” noted Pessin, “primarily because the buyer pool is diminished.”

But the interest is there, said Pessin who, like his colleagues, looks for a busy fall selling season.

“Buying trends over the last 30 or 60 days show every sign of continuing,” he said. “Technology, virtual showings, and agent commitment are making it more than ever possible for Americans to indulge their thirst for change. At the high end, especially, it makes finding just the right pied-a-terre easier than ever before.”

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Barbara Pronin

Barbara Pronin is an award-winning writer based in Orange County, Calif. A former news editor with more than 30 years of experience in journalism and corporate communications, she has specialized in real estate topics for over a decade. She is also the author of three mystery novels and two non-fiction books.

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