In prior Market Reviews we have defined the luxury market as homes which sold for $2 million or above. With the rapid rise in average prices recently seen this year we have raised this threshold to $2.5 million.
In recent years, the luxury market in Lexington has been very strong. This is shown by the key performance metrics Days on Market and Sale Price to List Price Ratio strengthening, and by an increase in the number of homes sold. The number of homes sold in the luxury market in 2022 was 55 compared to 52 in 2021 – a 5% increase. This should be viewed against a market that saw a 20% reduction in the number of home sales below $2.5 million and so the luxury market clearly outperformed the overall market.
There were 8 luxury home sales in 2019, this jumped to 27 in 2020, to 52 in 2021 and 55 in 2022. Normal price appreciation would tend to increase the number of homes in the luxury market, but the almost 7-fold increase seen since 2019 is extraordinary. Consistent with historic trends, new construction accounts for about 50% of the luxury market.
Many sellers of existing homes worry about the impact of new construction on the luxury market. The primary impact of these new homes is that buyers of existing homes will expect a similar quality to new construction. Given the characteristics of the luxury market and the new construction component of it, it’s important to focus on the fundamentals – home preparation, great staging, a comprehensive marketing plan, and the right pricing strategy are key to having buyers consider an existing home versus new construction and obtaining the maximum price for your home.