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Sotheby’s International Realty Market Update

Market Update – Telluride

 Telluride, CO (Bill Fandel – Telluride Sotheby’s International Realty)

Telluride market conditions were very strong Q3 and Q4, with an overall record number of sales over $10m marketwide in 2012.  Since the first of the year, tracking closely with the sunset of lower capital gains and tax rates, we saw a substantial decline in sales activity in Q1 closely paralleling with the Aspen market.  Despite a very slow Q1, we are seeing a return of vitality to the market. 

 Buyers continue to be North American in origin, with some Latin American buyers mixed in. Particular concentrations of buyers continue to be from Texas, New York, Florida, and California.  We’ve seen a growing number of inquiries from wealthy Californians interested in exploring relocation of their primary residence to their Colorado second-home to flee the growing tax burdens California has instituted.

 I’ve quizzed a number of clients on their outlook and confidence about the economy, with most showing measured optimism about the property markets but continued caution surrounding the eventual unwinding of the Fed-driven policy that continues manipulating interest rates.

 Property acquired with cash and very cheap debt may prove a strong and stable alternative investment to other investment classes.

 Inquiries for summer rentals, single family homes, condos, and ranches are all on the rise.

 Market Update –North America

 Recently I discussed market highlights around the country with some of my global partners at Sotheby’s International Realty.  Here are some points of interest:

 Seattle, WA ( Stacy Jones – Realogics Sotheby’s International Realty)

  • The Metro Seattle area is witness to a dramatic housing market rebound since completing its post-recession correction during the first quarter of 2012. 
  • Major employment growth from retail titan Amazon.com, which alone has sparked more than 3 million square feet of new office space demand in downtown Seattle, coupled with regional expansion at Fortune 500 companies that includes Boeing, Microsoft, Starbucks and Nordstrom is driving local housing demand. 
  • Collectively corporate growth in the region is drawing thousands of relocating professionals to the Emerald City, including a significant influence from foreign countries, especially Mainland China chasing H1-5 visas for tech workers. 
  • Demand has risen much quicker than supply.  This has caused a seller’s market with less than two months of inventory available in most metro markets. 
  • Only new apartments have been built to address the quickly expanding population base in the City of Seattle (the number of households in downtown Seattle has expanded by 35% since 2000 and is expected to rise another 10% over the next five years).  Rents are expected to rise another 5.5% in 2013 despite thousands of new apartments being delivered (in fact it’s now more expensive to rent than to own in moderately priced segments in the city).

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Aspen, CO (Craig Morris – Aspen Snowmass Sotheby’s International Realty)

  • December was by far the best month we’ve had in over 4 years, followed by 3 straight months of lackluster figures.
  • Our buyers are mainly from the US, but our international crowd has picked up some in the past few years, mostly from the UK and Australia.
  • Majority of our buyers come from Texas, California, New York, and Florida. 
  • Increase in buyers from the Midwest; Chicago, Cincinnati, Michigan and Iowa, and several from Toronto 

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Chicago, IL (Chris Feurer – Jameson Sotheby’s International Realty)

  • Severe lack of inventory virtually over night
  • Trend started in fall of 2012
  • Multiple bid situations are pushing prices higher quickly
  • Prices are climbing so quickly that appraisals are becoming an issue
  • New construction is creeping back into our market
  • We anticipate some brand new rental towers will choose to go condo based upon buyer demand

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Washington DC (Michael Rankin – TTR Sotheby’s International Realty)

  • Luxury buyers are back: 24% increase (Q1 2013 vs Q1 2012) of home sales over $1 million in the Washington Metropolitan Area.
  • A rapid pace: 33% of $1 million plus sales in Washington, DC were on the market for less than one month.
  • Inventory shortage at all price points: Today only 6,000 homes are for sale in the entire DC Metro, down from an April 2008 high of more than 25,000 homes

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New York, NY (Royce Pinkwater – Sotheby’s International Realty New York)

  • New York City is currently the number one market in the world, taking the spot from London, according to the latest Knight Frank Report.
  • The market is booming at the top end, with lack of inventory being the biggest issue.
  • Record prices being paid for co-operative and condominiums.
  • Downtown is very hot – new condo 150 Charles sold very quickly.
  • Most overseas buyers purchase condominiums.

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Toronto, Ontario, Canada (Fran Bennett – Sotheby’s International Realty Canada)

  • Q1, 2013 sales down by 14% (compared to Q1, 2012). This is due to a lack of inventory.
  • Q1, 2013 average sale price up by 3.8% (compared to Q1, 2012)
  • We are continuing to experience a severe shortage of properties to sell and therefore our market is seeing multiple offers on almost anything for sale (excluding condos) up to $1.5 million. We don’t seem to be able to build any inventory which is what we were hoping for this spring to return the market to a more balanced position.
  • Condo sales are down, while the inventory of new condos is high and increasing. We currently have 140 new condo buildings under construction. In particular, the market for new condos in the top-tier (over $2 million) has experienced a significant and sustained softening of demand.

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Hamptons, New York (Dana Trotter – Sotheby’s International Realty The Hamptons)

  • The market here is heating up – the warmer temperatures are bringing both buyers and renters.
  • We are seeing a shift towards seller’s market for the first time since 2006.
  • Bidding wars are happening in all segments especially the properties in the lower ranges (under $2m)
  • Generally the market is extremely active up to $10m with little quality inventory from $5m – $10mm

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Greenwich, CT  (Shelly Tretter Lynch – Greenwich Sotheby’s International Realty)

  • The market has definitely picked up
  • Single family home contracts are up year-to-date by 7.8 %
  • The $5 plus million dollar market (off the water) is actively trading.  Quite a bit of old inventory is under contract
  • Bidding wars, recently forgotten, are now appearing
  • New construction starts are up.  I have listed two new construction homes in the $8 million range
  • Confidence  (in values) for the Greenwich properties is at the highest level in 4 years
  • Back country is starting to see more activity
  • I believe that both buyers and sellers are becoming more realistic
  • We are seeing our “long term” tenants now buying
  • Very attractive to foreign buyers
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