Buyers, now weeks or months after the pandemic lockdown, are still flooding the market in search of more spacious single-family homes, but sellers aren’t in quite as much of a hurry to make a move, and chronically low inventory is plaguing cities across the U.S., pushing up prices.
A recent report from realtor.com showed that since the start of the Covid-19 pandemic, 400,000 fewer homes have been listed between mid-March through the week ending Sep. 19 compared to the same time last year. Properties are selling an average of 12 days faster, and median prices are up 11.1% year-over-year.
Even in luxury markets that have seen especially dramatic upticks in demand, however, prices are still often in the realm of the reasonable—for now. They’re being pushed up all the time by over-asking offers from buyers who are eager to close deals before a second wave of the coronavirus and a potentially chaotic presidential election.
Here are three luxury markets that are seeing steady growth but where high-end buyers can still find relative bargains and room for a return on their investment, if they’re willing to act fast.
More: A Rise in Demand for Urban Three-Bedrooms Means Sellers Could Command Top Dollar
San Francisco’s East Bay
Much like New York City, San Francisco has seen something of an exodus in the last six months, as residents of the nation’s densest cities seek out more space.
“San Francisco is the weakest market now in the Bay Area,” said Patrick Carlisle, chief market analyst for Compass and author of the brokerage’s Bay Area market reports. “The strength of the markets has pushed into more suburban, more outlying and sometimes even more rural counties.”
Just across the water in the East Bay, however, things do look markedly different. In Alameda County, Oakland and Berkeley have seen growth in their markets for years as prices in San Francisco have skyrocketed, and that effect is now magnified thanks to wealthy buyers looking for larger properties that are still convenient to the city.
However, the most dramatic growth can be seen in the region’s more suburban markets like Contra Costa County as well as Piedmont, a smaller, more suburban area surrounded by Oakland.
More: As Winter Approaches, Caribbean Islands May Be a Lure for Both Investors and Second Home Seekers
Sales of luxury homes (priced $2 million and up) increased 116% in Contra Costa between summer 2019 and summer 2020, according to data provided by Compass.
“The market has been going very very strong since the pandemic,” Mr. Carlisle said. “The dollar per square foot runs half of places like San Francisco, and there tend to be bigger lot sizes.”
While overall luxury sales in Alameda County have increased by just 13% in the same time period, in higher-end areas, the market is moving quickly.
“In Piedmont, everything north of $4 million, which is our luxury market, is selling in seven to nine days,” said Anthony Riggins with Sotheby’s International Realty in the East Bay.
More: The Pied-à-Terre Could Make a Comeback With Buyers Who Want to Maintain Connections to Cities
“Historically, it would be 21 days. Maybe you’d see an overpriced listing stay on the market for 40 days,” Mr. Riggins said. “Now, it appears that no one has overpriced a listing above $4 million. It doesn’t seem to matter.”
In wealthy Marin County just north of San Francisco, luxury sales (priced $3 million and up) have jumped 109%, per Compass’s data, reflecting strong demand for higher-priced suburban listings, as well.
Offers are consistently coming in over asking prices, brokers say, and combined with extremely low inventory—less than a month’s worth in most counties, according to Compass—values are expected to continue trending upward.
“The buyers are very serious,” said Andrea Gordon, a Bay Area agent with Compass. “If you have a $1.4 million house, you’ll have a lot of offers at $1.8 million. Then there’s that person who puts in the crazy offer at $2.1 million. Then everyone perceives the market is going up.”
California’s devastating recent wildfires add yet another complicating factor in the market, as second-home buyers who’d previously looked in Sonoma County take their searches closer to the city, spooked both by the fires themselves and the possibility that insurance companies will no longer cover homes in high-risk areas Mr. Riggins said.
All of which combines to paint a picture of a region with a large number of high-net-worth buyers with increasingly limited options of where to go, and plenty of resources to bring into outlying areas.
“There’s always been a lot of extremely affluent people in the Bay Area. They’ve always had the money. They just didn’t need to buy a second home,” Mr. Carlisle said. “Now they want a place where their kids can run around, and they’re suddenly [in the East Bay] buying $2 million, $3 million, $4 million homes.”
More: Why You Might Want a Jumbo Mortgage Right Now—Even if You Don’t ‘Need’ It
Park City, Utah
The luxury buyers not looking directly outside of cities during the pandemic seem to have taken their searches to traditional vacation or second-home markets, where many are now hunkering down indefinitely.
Mountain communities like Aspen in Colorado have seen such an influx of interest that demand has spilled over into quieter, outlying areas, and some luxury buyers have taken their searches to Park City, Utah, still a comparative bargain.
“A lot of what’s happened is people came to spend a week, decided to stay for a month, then decided not to go home,” said Marcie Davis, an agent with Sotheby’s International Realty in Park City. “This is supposed to be the shoulder season. The market is supposed to be quiet. It is not.”
Price per square foot in Park City is edging up from $1,000 to $1,200, Ms. Davis said, compared to Aspen’s typical $3,000.
“You get much more bang for your buck here, and we’re pushing upward now,” Ms. Davis added. “We’re seeing multiple offers, which we’re not used to, and we’re seeing things go under contract immediately. It used to be every once in a while we’d have a sale above the $10 million mark, and we’ve had a lot of them this year [since the start of the pandemic].”
As in the rest of the country, inventory is scarce, but sales are still moving fast.
More: Super-Luxury Single-Family Homes Are in High Demand, but the Window Could Be Closing on Getting a Deal Done
“Our inventory is at an eight-year low right now, but that hasn’t seemed to hurt sales to this point,” said Derrik Carlson, an agent with Keller Williams real estate in Park City. “Just last week, we caught up to 2019 sales. I sold most of my listings during Covid, and there were still cash buyers that were making strong offers.”
“We have seen more high-end multi-million dollar sales in this short period of time than we have in probably two years combined,” said Jessica Allen Bateman, an agent with Windermere Real Estate/Luxury Portfolio International in Park City. “Things that weren’t selling readily are selling because inventory is so low.”
In Park Meadows, a neighborhood with its own eponymous country club, which also features the popular Jack Nicklaus signature golf course, there have been 17 sales above $2.5 million in the past three months, compared to six during the same period last year, according to data provided by Ms. Batemen and her sales partner Tom Ward. Similarly, in the more centrally located Old Town neighborhood, 15 luxury homes have been sold in the last three months (with 10 more sales pending), compared to just five during the same period last year.
“Supply and demand will always push up prices, and that’s clearly what we’re seeing,” Ms. Davis said.
More: Low Mortgage Rates, Limited Inventory, and Pent-Up Demand Could Make This Fall a Busy Season
Charleston, South Carolina
Much has been made of the recent stream of New Yorkers and other northeastern city dwellers heading south for Florida’s more hospitable weather (and tax laws). But it isn’t the only southern state seeing such an influx.
“We’re seeing a lot of people coming from New York City, Connecticut, the metropolitan D.C. area,” said Ruthie Ravenel of Daniel Ravenel Sotheby’s International Realty in Charleston, South Carolina. “I don’t even know that I have any local relocating buyers right now. Everyone seems to be moving from somewhere else.”
In July and August, 265 deals closed for $1 million and up in Charleston, compared to 116 during the same period in 2019, according to Ms. Ravenel, and in parts of the city, inventory is down as much as 50%.
In turn, prices on the high end are edging up.
More: For Buyers Ready to Leave Major Markets, Smaller Cities Offer (Relatively) High Supply
“Last spring, we were seeing recently renovated homes sell for $1,000 per square foot,” said Charles Sullivan with Carriage Properties, LLC/Luxury Portfolio International in Charleston. “In the fall, that went up to $1,100. Now we’re seeing highs of $1,200 and $1,400.”
“People are demanding the very best, and the least amount of work,” Mr. Sullivan added. “If you have an ultra-renovated house with a pool, parking, a garden, it’s selling pretty quickly.”
On Sullivan’s Island, a popular spot for second homes just outside of Charleston, price per square foot has gone up $100 in the past year, Ms. Ravenel said, and sales were setting price records prior to the pandemic.
In Charleston as a whole, “In the high end, there’s very little to show people,” Ms. Ravenel added. “If you have a $3 million or $4 million buyer, there’s only six or seven houses to show them. Transactions are up 5.8% year-to-date compared to 2019, which isn’t earth shattering, but [indicates] clear continuation of strong appreciation and activity.”
“Last year from January through Sept. 25, we did 114 sales of homes $2 million and up,” Mr. Sullivan added. “In 2020, we’ve already closed 172 in that price range, and we’ve got 70 under contract. It’s been a very fast market.”
Click for More In-Depth Analysis of Luxury Lifestyle News