The luxury home market in Birmingham is being driven by two economic events that occured over the past eleven years; it started in 2006 - 2007 with the Sub-Prime Crisis resulting in many homes loosing up to 33% of their market value and in some cases forcing foreclosure. We're still seeing the effects of the Sub-Prime Crisis in that many Generation X'ers don't have the equity in their homes to step-up to a luxury home that they may desire. The second economic event coming into play started in 2011 when the first Baby Boomer turned 65 and decided it was time to retire, down-size and move closer to the grandchildren. We call this the Baby Boomer Sell-Off.
The table below shows that each year the number of homes listed in Birmingham for $750,000 or more steadily increased from 2005 to 2007 when it peaked at 905, then as home owners saw the values of their homes drop, listings started to decrease through 2013, at the same time the price sellers were getting for their homes dropped and has yet to reach the levels of 2005. The number of listings has climbed as the Baby Boomer Sell-Off started to kick in in 2013, now reaching 652 listings in 2017. As the number of sales have increased the price of the average sale has remained relatively constant over the past 13 years. This can be explained by the market pressure produced by the growing supply of luxury homes while the number of luxury home buyers remains at 50% or below of the number of luxury home sellers. Although the number of sold homes is increasing the number un-sold homes is increasing as well explaining in part for the growing number of listings as more and more homes are being recylced back into the homes for sale invintory. It's not uncommon to find luxury homes that have been on and off the market for for over four years.
The DOM (Days on the Market) represents the average days that those homes that sold were on the market, it does not tell us how many DOM the homes that did not sell linger on the market.
|Year||Listed||Sold||% Sold||Un-Sold||Avg Sale Price||Sale/List||DOM|
|Sub Prime Crisis||2006||789||265||33.6%||524||$1,056,059||95.9%||149|
|Baby Boomer Sell Off||2011||409||132||32.3%||277||$1,054,097||90.7%||194|
Why is this important information for both buyers and sellers of luxury homes?
As long as there are more sellers than buyers homes are not going to appreciate in value. If you want to sell your home you're going to have to update your kitchens and baths and paint the walls in neutral colors. Your buyer is going to be half your age, both with jobs, the've had no experience with contractors and don't want to travel down that road. Adding to this some of the houses that you're compeeting with will make the improvements and the buyers will opt for that home over yours. At most 50% of the luxury homes on the market are going to sell, the numbers don't lie.
Look around your home is it a reflection of you and your life, the things you're interested in? Get rid of all that stuff, you're going to have to pack it up anyway when you do sell your home so do yourself a favor and pack it up now. Your potential buyer doesn't want to buy their parent's home and they certainly don't want to buy their grandparents home, so don't try to sell it to them, sell them what they want. You're selling a product, it just happens to be you home. Imagine your home on a shelf in Macy's next to the other homes in your neighborhood for sale; look at the presentation of your product compared to your competition, compare price. Now imagine yourself 30 years younger with a young family, which would you buy. You say you've never been in your competitions home, and you don't know the price of the other homes that you're competing with. Shame on You! If you were sell ketchup, you'd sample the competition, wouldn't you?
You're going to have to market your luxury home and that means you're going to have to market your home where your potential buyer goes... that's the Internet. If you've had your home on the market and you haven't heard these words your house isn't going to sell. "I saw your home of Facebook." "Was that a picture of your kitchen on Instagram on the Million Dollar Home page?" " I saw your beautiful master bathroom on Pinterest" or "I watched a video tour of your home on YouTube." You're selling a Ferrari not a Ford, so you need to market a Ferrari, a sign in the yard and a MLS listing won't get the job done. If you go that route you'll be selling your home on price, keep reducing the price until it sells.
Know the market, the above numbers are important but more important are the numbers relative to neighborhood that your wanting to buy in. Location is of primary importance. In Birmingham you'll find most of the luxury homes in Mountain Brook, Vestavia/Liberty Park, Greystone, South Lake, Shoal Creek and Highland Lakes. Prices will vary from an average of $110.00 to $525.00 per square foot, lifestyles will vary from village walking neighborhoods to country club communities to lake side living. Ask you agent for these comparisons so that you can make an informed decision.
When you find the home that you think you want, ask to go back to the home when the homeowners are there so that you can talk to them and get a better feel for the house and the neighborhood. The real estate agents may object to such a request because they want to remain in control, but it's your money and it's your risk so get all the information that you can.
Knowing the seller and their motives and them knowing you and your family will also help you when you get to negotiations. If you were buying a used Lamborghini wouldn't you want to talk with the past owner?
Invite Kerry to speak to your group about the changing Luxury Home Market in Birmingham. BestofUS.firstname.lastname@example.org 205 919 6006
Kerry Grinkmeyer is a real estate agent in Birmingham, AL specializing in the marketing and sales of luxury homes. Kerry's a retired financial advisor, he sold his firm, one of the largest in the Ameriprise Financial Advisor system in 2005 to his son, daughter and nephew. Now he's building one of the largest boutique real estate agencies that he'll eventually sell to his grandchildren. He the author of the children's book The Christmas Web- A Family Christmas Tradition. Kerry competes in the Senior Olympics in to 50M, 100M and 200M dash as well as the 5k and 10k time trial cycling events.
Kerry offers you his financial background, knowledge of the community, love of business and family and energy to assist you in one of the most important financial decisions you'll make in your lifetime.
205 919 6006