The Wilmington area’s real estate industry has been booming in many ways in recent months and years, but when it comes to the area’s highest-priced homes, the numbers tell a different story, experts said Thursday.
“In the luxury portfolio division, it’s a buyer’s market because prices are high, inventory is excessive,” said Chris Livengood, vice president of sales at Wilmington-based Intracoastal Realty Corp. “We’re [at] about 20 months of inventory in New Hanover County in the million-dollar-plus category.”
Between five and six months of inventory is normal overall in the housing business, and the local market in general is at or below those numbers, Realtors say. As a result of the difference between overall numbers and the high-end supply, managers and top agents at Intracoastal Realty met Thursday morning in one of the firm's rooms at Lumina Station to discuss the luxury market.
In New Hanover County, Livengood explained, the term "luxury" relates to homes priced at $1 million or more, and in Brunswick and Pender counties to homes priced at $750,000 or more.
At the start of the discussion, Intracoastal Realty founder and CEO Jim Wallace said that the high-end market in the area “is still very good. Gosh, people love to come to this part of the country and buy a house in a plantation community for the golf courses and things like that ... they want to be on the water ... this area is famous for having great, quality high-end luxury properties, but that market’s a little bit different, and that’s what we’re going to address today.”
Livengood said, “We actually have 54 agents in the company that have listed or sold in the last 12 months a million dollar-plus property.”
But having frank discussions with sellers on pricing is key to improving that market, especially for those sellers who can’t or don’t want to wait several years to find a buyer, according to the national experts and local economist who spoke during Thursday’s session.
“I don’t anyone thinking, ‘What’s wrong with Wilmington?’ There’s nothing wrong with Wilmington. ... This is happening across the entire country that in the upper end there’s too much inventory, and we have to get those prices right,” said Steve Harney, founder of a New York-based company that tracks and analyzes real estate trends, addressing the group via speaker phone.
Harney advised local Realtors to schedule seller consultations and, “Don’t start at the dream price” when it comes to luxury homes; start at the bottom and work up from there.
“Realize that if the price isn’t compelling, the house isn’t selling,” Harney said.
Other pieces of the puzzle when it comes to the high-end market nationwide include a strong U.S. dollar; a softening across all luxury categories, from cars to designer handbags; a tumultuous election year that has created some uncertainty and potential hesitation on the part of buyers; and a change in the styles of luxury homes that buyers might prefer, said Paul Boomsma, president of Luxury Portfolio International and COO of Leading Real Estate Companies of the World (LeadingRE).
Boomsma, like Harney also called in to the meeting in Wilmington. Intracoastal Realty Corp. is one of 500 independent residential brokerages that make up LeadingRE.
Speaking to his point about changing styles, Boomsma said properties need to be relevant to a modern market, with the amenities and more casual atmosphere some current buyers want.
Woody Hall, professor emeritus of economics for the University of North Carolina Wilmington who attended and also spoke at the Intracoastal Realty event Thursday, agreed with the national experts’ assessments on a major factor in the condition of the local luxury market.
“I think it is a pricing issue as much as anything else,” Hall said.
Ashely Garner of the Ashley B. Garner & Associates Real Estate Group of Intracoastal Realty gave a recent example of a waterfront home at Wrightsville Beach. His group had the house listed for more than a year and got some interest after lowering the price to $2.4 million, he said. But lowering it even more, to $2.2 million, made a bigger difference.
“It was under contract in less than 10 days for cash to close in less than 30 days [at the $2.2 million price], and it was a buyer actually that had looked at it before, but they had no reason to be in a hurry. They had the money; they don’t need the house. It was the third house they’re going to own ... They just had no urgency at all, and the price is what put them over the edge,” Garner said.
April’s activity in the local luxury market mirrored that of March as the supply of million dollar-plus homes continues to exceed demand, according to a report compiled for Just For Buyers Realty.
Compiled from N.C. Regional MLS statistics, the report said New Hanover and Brunswick counties saw a decline in the combined number of closed sales on homes priced at $1 million or more, from 10 in April 2015 to six in 2016. Total volume in that category was down from $17.4 million to $7.15 million, according to the report.
"April marks the second month in a row with total sales volume of high-end homes down more than $10 million compared to the same month last year," the report said.