Last year’s first quarter report saw a surge in high-end sales that put homes $400,000+ ahead of the overall market, a pace that continued through year-end. Now, the rest of the market is catching up. While the high-end segment managed to match last year’s first quarter performance with 184 closed home sales during the quarter (a very strong quarter historically), the broader market started posting double-digit gains with closed sales up 15%.
Despite the flat year-over-year change, high-end home sellers should take comfort in the fact that healthy sales growth in the lower price ranges will ultimately drive higher-end sales as buyers move up.
As would be expected, the brisk sales growth in the broader market has pushed overall inventory levels of available homes for sale down by 7.3%as buyers snatched up available homes. Lacking the year-over-year sales growth that impacted the lower price ranges, the number of high-end listings actually posted small gains for the quarter with an increase of 3.3% of high-end homes for sale compared with Q1 2015.
However, while the high-end has matched 2015’s absolute sales performance so far this year, if not its year-over-year growth, the next few month’s look primed for a dip as the number of pending sales (homes under contract, but not closed) has dropped 21% year-over-year. With the average sale taking 30-60 days to consummate, this will likely weigh on the Q2 results. Contrasting that decline with the 20% increase in pending sales for the lower price ranges shows the momentum is definitely in the under-$400,000 market for now.
The flat sales growth and increased listing inventory have kept the median sales price per square foot in line with Q1 2015 at $163.74, erasing the gains we saw in the latter quarters of 2015 which ended with a median price $173.63 in Q4 2015. However, these quarterly figures shouldn’t be given too much weight as they can be influenced by the seasonality of the market.
After several years of outperforming the lower price ranges, it’s not surprising that a high-end segment would take a breather. However, activity remains strong and while a slower Q2 seems likely based on Q1 pending sales, I would expect the impact of upwardly-mobile buyers to boost the high-end segment in the second half of 2016 and think this will end up being one of the best years on record for Louisville’s high-end homes.
All data used for this statistical analysis sourced from the Greater Louisville Association of Realtors and MetroSearch, Inc.