While most of us “normal people” are busy deciding what color to paint a room, uber-wealthy architects have some tough choices regarding the design of their luxury estates. In this month’s example, this guy must have thought, “If I’m going to build a castle, I must build a moat!” Château Artisan was built in 2007 in the Homestead neighborhood near Miami, Florida, by famous architect Charles Sieger. He lived there with his wife until recently and even hosted some favorite celebrities along the way. Dwayne Wade and Gabrielle Union hosted their lavish wedding there in 2014. John Legend serenaded them next to the koi pond. Notable celebs like Ludacris, Kevin Hart, and Carmelo were in attendance. The rapper Birdman also shot a music video there back in 2010. And those are, to name a few, we know about.
The property was constructed as the architect’s home on an artificial island. It was carved from coral rock in the middle of a 14-acre estate. The castle itself is 12,770 square feet. It features eight bedrooms, 12 baths, a chef’s kitchen, a 3,000-bottle wine room (wow!), a home theater, a lavish music room, and not one but two children’s play lofts. I could go on, but then I might as well copy/paste the listing description. The best news? It’s currently listed for sale! So all you have to do to own this spacious home is cough up $19.7 Million. Or, if you’d like to finance, the estimated monthly payment is $111,929/per month. Easy, right?!
(August Real Estate Newsletter, Part I Info Sources: Zillow.com, RobbReport.com, RediculousRealEstate.com, and Essence.com)
WHAT’S NEW IN THE REAL ESTATE MARKET?
As we recently reported, the real estate market is starting to normalize from the pandemic highs we saw over the past couple of years. In this August real estate newsletter, housing inventory was up considerably in July. There were almost 8,000 homes for sale at the end of the month. This represents a 30% spike in stock from the previous month and an 82% jump from July last year! This inventory jump is mainly due to the recent increase in interest rates over the past few months, as the Federal Reserve tries to control 30-year-high inflation.
INTEREST RATE UPDATE
Mortgage interest rates peaked at 5.81% at the end of June – the highest they have been since 2008. This priced many buyers out of the market. Or it made them decide they did not want to pay the now-even-higher price tag for homes. Some are still waiting in hopes that interest rates will go back down to historic lows. Others hope home prices will decline as they did during the Great Recession. However, given the current supply & demand imbalance in Denver and across the nation, it is not likely that home prices will decline sharply as many people hope. Instead, we expect prices to keep rising at a more gradual pace over the next year.
Interest rates went down at the start of the month to 4.99%. This was the lowest they had been since April. However, they went back up to 5.22% a week later. What does all this fluctuation mean for you?
Stop trying to time the market! If this is the right time in your life for you to move, you find a place you like, and you can afford the monthly payments: go for it! If you are hoping for some magical shift in the market that makes homes more affordable, all economic signs “point to no.” It is more likely that Denver will continue to show home appreciation year-over-year, as it has 47 out of the past 50 years. If rates decrease dramatically, you could refinance when things look brighter next year. If rates climb even higher, you will be glad you locked in your current rate. Either way, do not let rates alone be the reason you stay put.
INFO FOR SELLERS
One of the biggest mistakes you can make as a seller is pricing your home too high. Overpricing leads to fewer showings and occasional offers and could result in an unnecessary price reduction to get a deal done. In addition, if your home sits on the market too long, buyers may think there is something wrong with the property (even if there isn’t), which inevitably leads to you accepting less money than you could have for your home.
10 or 15% premiums on houses were the outliers over the past couple of years, making great headlines for reporters. The current average home premium was 5-6% on average this spring but has fallen to a 1% premium recently. Although you still have more negotiation power than buyers right now since inventory is still on the low side, historically speaking, do not make the mistake of getting too greedy! The market is cooling, so you would most likely be the one to pay the price.
INFO FOR BUYERS
We still do not consider this a buyer’s market. But, buyers who can afford a home should have an easier time finding a place for sale. Due to the increased inventory, properties are also sitting on the market longer than last year. There are also far fewer home showings per property. These extended days on the market can prove valuable to score a deal on a home. Particularly if a property has been sitting for 30-45 days, there should be more room for negotiation than there was last year. But, be sure to temper your expectations. Sellers still hold the cards as long as there are so few homes for sale. We are still ~7,000 homes shy of the mark we would need before we could go too crazy with our concessions.
We want to learn more about the market conditions discussed in this August real estate newsletter. We always have great classes coming up in our lineup here.
We use reasonable efforts to include accurate and up-to-date information. However, the real estate market changes often. Therefore, we make no guarantees of future real estate performance and assume no liability for any errors or omissions in the content.