Four Factors that are Driving the Luxury Market in 2019

I always show my Luxury Listings because I believe it’s important to tell the story of the house to prospective buyers. I also find it beneficial to get feedback in person that I might not otherwise get which helps me help my clients. Over the course of the past 3 months, I’ve shown two of my listings a total of 15 times. Here are four very important insights from my experience in the current market:

1. There is Over 20 Months of Inventory: A typical balanced market has 6 months of Inventory, anything less is considered a Sellers Market and anything more a Buyers Market. As of this writing in May 21, 2019 there are 96 homes listed for $1M or more in East Cobb with 56 sales in the past 365 days. This means there is 20.6 months of inventory (96/56 x 12 months = Months of Inventory).
2. Buyers Have Leverage: Contrary to what most Sellers think, Buyers are smart and well informed. They have a lot of homes to choose from and know they have leverage when it comes to negotiating a price. There are all kinds of ways to assess the value of a house, the most important one and really the only one that matters is what a Buyer is willing to write a check for.
3. Condition Drives Price: Buyers overestimate the cost of repairs and improvements. If there is a dollar’s worth of work to be done, buyers think it costs three. Part of this is the hassle factor of having to make the changes themselves. So the main takeaway here is the perceived value of work that has recently been completed is higher than the actual cost to do it.
4. The dangers of over pricing far outweigh the dangers of underpricing: The market will typically self-correct in an underpriced situation, when a house is priced too high the market will reject it. This is easy to track, if no one is asking to see the house then it’s pretty clear the buyers have a different opinion of its value proposition. From a supply and demand perspective, if a house is truly under priced the market will know it which means more than one buyer will know it. This creates urgency through competition which, in theory, will chase the price up to market equilibrium.