I recently had the opportunity to appraise a custom built luxury home in Shelby County Alabama. The home had been on the market for quite some time with no activity to speak of. I was contacted about doing an appraisal on the property to see how the price it was listed at stacked up against recent sales and current active listings. The home had been listed at close to $700,000, however because it had not sold this price was considered the upper limit of value. Finding comparable sales was extremely challenging. MLS data indicated that over the last 4 years homes selling for over $500,000 has slowly decreased as seen in this trend line graph of the data:
Is seems that the price trend for these upper priced homes is very similar to the lower priced homes in the area. Because of decreased demand (due to economic conditions including job losses, competition from foreclosures, etc) prices have dropped to attract more buyers. The number of homes selling over $500,000 has also decreased for the reasons already given. You can see in this graph that sales have decreased significantly since 2006:
The last information I looked at was days on market. This data shows how many days (average days per year in this case) it took to sell homes over $500,000. As you might expect, the days on market is increasing. It takes longer to sell a home in this price range because of the limited number of buyers. So you can see why it was difficult to find sales for homes over $500,000. The demand for this price range home is not what it once was. There are fewer buyers either because financing is limited or the buyers just don’t have the confidence in there income/jobs.
All of these factors are taken into consideration when we do a marketing appraisal. We have to look at past sales as well as current competing inventory. If you need an appraisal to set a list price that is competitive with the market please give me a call, I would be glad to help you.