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More high-end home sellers across the country are being forced to offer discounts as the luxury real estate market shows signs of softening, The Wall Street Journal reports.
Read more: Luxury Owners Rethink How They Use Space
“Buyers are very price sensitive,” says Donna Olshan, a real estate professional based in Manhattan. “If it’s not priced right it’s going to sit until the cows come home.”
Real estate pros and sellers in the luxury market are having to adjust their expectations. In the third quarter of 2016, the median asking price for homes in the top 5 percent of listings reached $1.2 million, an 18 percent increase from a year ago, according to realtor.com® market data. The actual sales prices in that luxury segment, however, only rose by 3 percent during that period.
Luxury listings are lingering on the market longer than the overall market too. Luxury listings are taking a median of 131 days to sell, about 4 percent slower than a year ago, realtor.com®’s data shows.
“The smart sellers today are pricing for now, not 2014,” says Jeff Adler, of New York’s Douglas Elliman. “An $88 million apartment went into contract three years ago and just sold. Would they get $88 million today? Probably not.”
The strength of the U.S. dollar has caused some overseas buyers to pause. Also, oversupply may be another problem facing the luxury market. For example, a surge in luxury condos and speculative homes over the past five years in markets like New York and Miami has sparked a slowdown. A luxury apartment in Manhattan was listed in April for $120 million and is now being offered at $96 million, a $24 million discount. A luxury condo in midtown is seeing developer discounts now being offered at 10 percent to 15 percent on lower-level units priced between $4 million and $12 million.
“We’ve priced to account for today’s market,” says developer Gary Barnett. And, “the market wants to see some discounting.”
Source: “Luxury Home Sellers Slash Millions off Asking Prices,” The Wall Street Journal (Feb. 23, 2017) [Log-in required.]
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