Disconnect between Buyers and Sellers in Luxury Real estate
$4.125 million - Offer rejected!
The luxury real estate market is stalling as an apparent disconnect between buyers and sellers brings sales levels to a standstill. A recent auction in Steamboat Springs, Colorado illustrates this fact very clearly. The Steamboat pilot reports that two luxury homes placed up for auction last week failed to sell after the seller rejected the high bids after the auction was complete. (Although one of them “may” be sold.)
I must admit to being a little confused as to the point of advertising an auction using the tagline “bidding starts at $1 million” when the owner is prepared to reject an offer of $4.125 million. Admittedly, the property that failed to sell was previously offered for sale at $6.8 million, but this just serves to add to the confusion as to where to price luxury properties at the moment. With sellers holding out for every last penny, and buyers making what they consider to be fair offers in the current market; neither being prepared to budge, the volume of sales is making pricing extremely difficult.
This is the latest in a long string of luxury property auctions that failed to realize a sale. Even with a drop of 30% on Somerset Manor in Niwot, CO, a sale did not materialize. Senator John McCain’s home in Arizona also failed to sell at auction recently. Sellers seem to be waiting for the banks to start printing money again, but my feeling is, if you have an offer close to your asking price, take it, because things could well be worse next month, and we are grinding to a halt. Sales of properties priced over $1 million in San Francisco numbered just 20 in January, compared to 73 the year before, despite the fact that most properties for sale have had their prices reduced several times and inventory has soared.
My fear is that these properties will be panic sales eventually, when the next round of bad news comes out of the financial markets. The luxury real estate market is going to stay stalled until we have some realistic sellers. The same could not be said for Michael Jackson’s collection of stuff. The contents of Neverland Ranch go to auction in April, and I have a feeling it will all sell.
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I couldn’t have said it better myself! Sellers seem to be holding hope that the ‘good times’ of 2-3 years ago will be back in short time. It is real roll of the dice because as time continues to pass, it is becoming more likely that we will not see 2004 level prices for a very long time.
Interesting perspective. I’ll link my post about the auctions to this post.
Eliese Pivarniks last blog post..Colorado Group 2009 Steamboat Real Estate Market Report
No need to add a link Eliese. We have software that will do that automatically for you and link to your last blog post.
@ Link Moser
Quite right, it is a dice roll. If you can afford to hang on to the property, perhaps a good call, but I doubt we will be returning to the “good old days” any time soon.