While home sales dropped 3.0% in August 2016 vs 2015 in Lincoln Park, the Near North Side, Lakeview and North Center, it was an improvement from the 21.9% drop in July.
As we head into the Fall 2016 real estate market we continue to see the overall market soften a bit; however, the luxury market (homes priced over $1,000,000) has some larger issues.
Here are 3 signs that the real estate market for luxury homes is struggling.
1. Home sales are falling faster
August homes sales fell 3.0% in August 2016 vs 2015, but luxury home sales dropped 21.8%. Sales of homes priced under $1,000,000 fell just 1.2% during the same period.
2. Inventories are going in two different directions
Inventories of luxury homes rose 16.9% in August 2016 vs 2015, while inventories of homes priced under $1,000,000 dropped 18.4%. The low inventory levels of homes priced under $1,000,000 has created a strong seller's market, while high inventories of luxury homes have slowed that portion of the market. The resale of luxury homes is lagging behind sales of new construction luxury homes.
3. Market times are increasing
It is not uncommon for luxury homes to have higher market times, because the potential buyer pool is smaller; however, luxury market times continue to rise. In August 2016 luxury home market times rose 8.5% over 2015, while homes priced under $1,000,000 dropped 4.3% during the same time period. With luxury inventories rising, it is time for luxury sellers to re-examine their pricing strategies.