WASHINGTON – Luxury real estate sales, which have led the market in numbers and dollar value since the pandemic, have started to settle out, declining 7.7% year over year during the first quarter of 2024, while the overall market slipped 3.3%, according to a recently released analysis by Coldwell Banker Schmitt Real Estate Company.
Luxury real estate is currently defined by Coldwell Banker Schmitt as improved residential property listed in excess of $1.5 million. That definition may change, however, as the average cost is now more than $2.5 million, up 62% from $1.6 million at the end of the first quarter of 2020.
In the first quarter of 2023, luxury homes accounted for 26% of sales and 57% of the total dollar volume of sales Keys-wide. In 2024, those percentages declined to 25% of sales and 53% of the dollar volume.
Even with the decline in the number of luxury sales and their impact on the overall market, the average sale price has continued to keep pace, increasing 13.8% year over year compared to the 15.8% increase for the overall market.
“We continue to be very bullish about the continued strong impact of the luxury market on total sales,” the report states. “Leading the way in the luxury market are newly constructed, single-family residential homes, many of which are designed to appeal to the vacation rental market, and which are typically selling for over $1,200 per square foot.”
With the sunset of Rate of Growth Ordinance (ROGO) residential dwelling unit permits, the ability to build new luxury homes is limited to the few properties that are ROGO-exempt. Those properties are becoming rarer and more valuable, which will limit the number and increase the cost of new homes, the report says.
“That scenario will not improve until a new ROGO system is adopted, which, given the expected legal challenges, will take a number of years to implement. For these reasons, along with the desirable Keys lifestyle, we believe the cost of luxury homes in the Keys will continue to increase through 2024,” the report concludes.
A sub-market analysis found that the greatest decline in luxury sales came in Key West, which was down 25% from the first quarter 2023. Elsewhere, the Middle Keys was off 9% while sales in the Lower Keys were unchanged and the Upper Keys saw a 22% increase. The average sale price increased 14% Keys-wide. The Middle Keys was the only submarket to post a loss, down 8%. Key West gained 13%, the Upper Keys 24% and the Lower Keys rose 35%.
During the first quarter of 2024, 135 residences listed at $1.5 million and higher were sold. The average price was $2,568,301. The highest sale price was $6.9 million. The average time on market was 84 days.
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