By Chad Taylor
Just this week I was making calls around a recent Prairie Village listing to see if any of the surrounding neighbors had given thought to selling with the spring market now in full swing. I reached a long-time PV resident on the phone who proceeded to tell me exactly what she thought about the housing demand in her neighborhood, especially as it pertains to the new 800K+ tear downs that have become so prevalent. We were on the phone together for about fifteen minutes because I could tell that she needed someone to listen to her concerns. The call ended on a friendly note, however, it left me asking, “Since when is it a bad thing to know that you live in a highly desirable neighborhood where calls and letters come frequently asking if you would like to sell your home?” But I digress.
Her strong feelings toward the tear down phenomenon did cause me to look into the luxury PV market to see how it is performing during the shifting market. I have noticed recently that there are quite a few $800K homes sitting on the market currently when there was a time when they would barely get the foundation poured before the home was under contract.
Here is what I found out:
Currently there are eight single family homes (five years old or newer) for sale over $800,000.00 in Prairie Village, all of which are new construction with the exception of one.
In the last two months, only one home in that price range has gone under contract and it was a new construction property in the low $800’s.
Quick math tells me that at that sale rate, there is currently sixteen months of inventory in the PV luxury market when only one is selling every two months. Perhaps the sales rate will increase as we move further into the year, but for now that means the luxury PV market feels like a buyer’s market.
Another piece of this story to watch are the resale of tear downs that have been owned and lived in over the last few years. This spring is presenting the first of these homes where essentially lightly used tear downs are now competing with new construction tear downs which have never been occupied. This will be an interesting story.
I say it will be interesting because the PV market has seen home value appreciation over the last 2-3 years, but how much have the new homes appreciated? Or are they like a used car where the moment you drive them off of the lot they lose value? And if so, how much? In other areas of town currently, where resale properties are competing with new, the new properties are achieving the highest sales prices and the previously owned homes are selling for less to compete. Why would Prairie Village be any different? Again, this will be interesting to watch over the new few months.
The graph above shows the number of new homes ($800K+) that have hit the market in a given month over the last year. You can see that in February 2018 there were no new luxury homes that listed for sale. This year, however, five new luxury properties hit the market in January and four in February. These early 2019 listings could be the reason for the increase in inventory. Considering that only one has sold in the last 60 days yet nine new listings have hit the market, the demand for these homes simply cannot keep up.
This weekly sponsored column is written by Chad Taylor of the Taylor-Made Team and Keller Williams Realty Key Partners, LLC. The Taylor-Made Team consistently performs in the top 3 percent of Realtors in the Heartland MLS. Please submit follow-up questions in the comments section or via email. You can find out more about the Taylor-Made Team on its website. And always feel free to call at 913-825-7540.