Luxury Homebuying Turns Up As Wealthy Spot ValueFri, Jun 22 2012 00:00:00 E A10_OPPEDITPosted 06/21/2012 05:56 PM ET
Wealthy homebuyers are back. In March Forrest International Realty sold this estate in Naples, Fla., for $47.25 million, the area's top sale price. View Enlarged Image
How are luxury home sales looking? Ask real estate agent James Forrest, who hit the jackpot when he sold a Florida beachfront estate for $47.25 million in March.
A cash buyer bought the five-bedroom mansion in sunny, monied Naples two weeks after Forrest began showing it to wealthy contacts.
At 23,000 square feet it's a big place. It's also the biggest sale in Forrest's more than 20 years selling high-end real estate, and he says it's the most expensive home ever sold in Southwest Florida.
Why now? The megasale comes amid a nice uptick in luxury home sales here and in other silken pockets of the U.S., such as Beverly Hills, Calif., and some areas around Washington, D.C. These are places where supply is tight and multiple offers on posh homes have become more common, boosting sale prices.
"Properties have been going up in value and the world's wealthy are looking to place their money here," said Forrest, who owns Forrest International Realty in Naples. "It started about five or six years ago when millionaires and billionaires started buying up numerous properties for an investment."
U.S. sales of houses priced $1 million and up rose 24% year over year in May, surging from a 13.4% year-over-year gain in April. These homes are just 1.9% of the market.
Scattered signs of recovery in U.S. housing have appeared, such as bidding wars and price gains in parts of the country where economies are humming. And consumer confidence, while variable lately, is at least higher than it has been most of the past three years. Against that backdrop, higher-end buyers have started pulling out the checkbook.
The luxury market, which was less affected by the housing recession, has been performing better than the rest of the market a while, says Katie Curnutte, spokeswoman at real estate website Zillow.
"The areas with a lot of high-end homes are the seeds from which this recovery is spreading," Curnutte said. "We're hearing a lot of stories about really tight inventories, especially areas with high-end homes — in Seattle, San Francisco and some of the hard-hit areas like Phoenix and Miami where there's a lot of investor interest."
Price For Posh
The Naples real estate market was also hammered by the housing slump. But it's turning around, says Wes Kunkle, manager of Weichert, Realtors On The Gulf in Naples. He estimates the price of properties selling above $2 million is off 10% to 15% from the top of the market.
Luxury Real Estate Sales Pick Up As Supply Tightens, Signs Of Housing Market Recovery Show.