subject: A Conversation About The Luxury Home Market [print this page] Interviewer: Today we are talking with Alison Brennan of the ABC investment team of RE/MAX professionals welcome to the show, how are you?
Alison Brennan: Good. How are you, thanks for having me.
Interviewer: Yeah well we are talking about luxury real estate, it's an area that you specialize in what is "The state" of the luxury market right now?
Alison Brennan: Well nationally its indicative of what's happening here locally in the Denver market, we have about over 30 month supply of inventory and in luxury home market place currently.
Interviewer: Okay.
Alison Brennan: So basically...
Interviewer: There is plenty to choose from.
Alison Brennan: Exactly its a great buyer's market still, thats not to say that certain packets of the Denver market area are out performing others like Cherry Hills, Green Wood, Crestmore and Hill Top but lots however there is a huge supply of lot still, so its a still a great time to either move up and buy that dream home or to build up from the grand up.
Interviewer: Yeah I get that, what for those people who dont know, what is the definition of a luxury home?
Alison Brennan: Luxury home, general rule of firm is that it's three times the average sale price in the marketplaces, so here in Denver average sales price is $250,000. So the price point of a luxury home would start at $750,000.
Interviewer: Well this question always scares people say to me, "Oh what's the activity right now?" and I always say "You know if you are right around a million dollars, you are going to get some showings, you are going to get some activity, maybe get some offers and as you get over too, it starts to get a little quiet", what do you see?
Alison Brennan: Exactly right over to the inventory goes up and so the absorption rate is high. So there you are going to have little bit less activity in that price range.
Interviewer: And I think one of the concerns out there with people particularly sellers is, am I going to be sell my property, there are some tighter guidelines as far as lending goes, will a buyer be able to get a loan to buy my luxury house, what do you say to those sellers?
Alison Brennan: Well I think you can sell your home. Of course there is a buyer for every home and there are tighter lending requirements. The buyer does have to be an A plus buyer you know 725 go around a 25% down payment, verifiable income and those are tough to do when you are self employed and but the seller I think needs to be counseled effectively by their real estate professional.
Interviewer: Well do you think the tighter lending guidelines now have made an impact on you know the luxury market and thats why we have got you know a surplus of inventory?
Alison Brennan: Absolutely. With tighter guidelines you are going to have a less buyer pool. So it's going to increase our inventory and when you have an over 12 months supply of inventory like we do here locally in the Denver market, its going to drive the prices down, so...
Interviewer: Now one of the things I tell our sellers is that you know I have not buyers coming in doing large loan packages. I see them really coming in at their leveraging portfolios, they are doing cash deals I mean are you experiencing pretty much the same thing?
Alison Brennan: Correct just because of the lending requirements they are requiring more down and buyers in this buyer pool might have a lot of assets, or their money tied up in other investments, but not necessarily cash right away available.
Interviewer: Right so how are some sellers effectively moving their properties?
Alison Brennan: Well certain sellers that are effectively moving their property have been counseled effectively by their real estate professional and when you are selling a luxury home, you have to realize that you are not just selling a home, but a lifestyle and to effectively target that buyer pool you have to realize what kind of lifestyle that home is offering. For example if that has a 1000 plus wine seller, about a wine seller, but what you want to do is maybe target the vendor clubs and not just locally, but nationally and internationally.
Interviewer: If you drink wine, you want this house?
Alison Brennan: Thats right, thats right.
Interviewer: I appreciate thats great information, thanks for being with us.
