The Luxury Market

In my 23 years of real estate experience, I’ve learned that buyers seeking a luxury home make real estate decisions from a more logical standpoint.  They view the home more as an investment, and are motivated less by purely emotional reasons. Therefore, the listing price must be high enough to satisfy the sellers, but low enough to attract potential buyers and generate viable offers. I can definitely tell that when the ratio of price to the number of buyers gets larger, pricing a luxury home becomes even more critical — higher listing prices means fewer buyers. In San Luis Obispo County, for example, we might see 60 luxury homes in excess of $2 million with only one or two buyers every few months. This makes pricing your luxury home critical to attracting interest.

The Necessary Research

I firmly believe that the ideal listing price for a luxury home creates that balance of reaching the largest group of potential buyers, while still selling the home at the highest price possible in the shortest amount of time. It takes a lot of “homework” for a good real estate agent to determine a luxury home’s asking price. Coming up with an ideal listing figure can’t be done in a day if the agent is conducting quality research on the property.

In my experience, finding the ideal listing price starts with honest communication between the home owners and the agent to identify key aspects of the home sale – seller motivation, the realities of the local market and recent sales of comparable properties. I need to determine how fast the sellers want to get away from the property. Their time frame makes a difference in how I list the property because they may be looking to redistribute funds from the sale into other investments, reduce the amount of taxes or interest, or just minimize heating and maintenance. The better I understand the seller’s motivation, the more realistic listing price I can set for the home.

The Pricing Challenge

Knowledge of the local markets also heavily influences the way I determine a home’s asking price.  In two decades of experience in this area’s real estate, I’ve learned that success in setting a luxury home’s asking price means being realistic. Some sellers believe that a good strategy is to list the home high and then negotiate down once an offer has been made. True real estate experts will discourage this because buyers seeking luxury homes are generally quite savvy when it comes to home values. Luxury homes that are overpriced may not even get showings because area agents are required to point out homes that are listed too high. If a home is listed just right, potential buyers will see value in the purchase and hopefully even compete against each other to make an offer.

Choosing the Right Representation

I advise both buyers and sellers to choose a real estate agent that will honestly deliver the results of the market research. Rather than pick the agent with the highest suggested listing price, go with an agent who can properly assess the value that the market will bear. I often see sellers selecting a real estate agent who assures them they can sell the house at top dollar, then asks to lower the listing price after a few weeks of no interest from sellers. Avoid this common error and choose an agent who will tell you what you need to do rather than flatter you.

Another way to ensure the most successful agent/client relationship is to select a real estate agent based on expertise and certification, years of experience and personality compatibility. Never choose a real estate agent solely based on the selling price he quotes if he hasn’t first done significant research into your and other relevant properties. Instead, rely on the agent’s reputation, education, experience and industry recognition to indicate the right person to sell your luxury home.

If you would like to learn more about my Silver and Gold Plan options for marketing luxury homes, please feel free to give me a call.

Related articles:  Tracking San Luis Obispo County Luxury Homes Sales; Luxury Home Sales in San Luis Obispo County on the Upswing?

The Harbor Terrace is being developed to be a coastal camping resort for both locals and tourists alike as an outdoor community gathering place surrounded by scenic ocean views. This development will be owned and run by the Harbor District.

Bay

The Harbor District vision states the following amenities:

102 RV locations
50 tent sites
25 tent cabins / domes
A main lodge
Restaurant (locally owned and operated)
Market deli café (offering local food and wine)
Harbor related uses

With the recent Port San Luis resident’s eviction notice, things appear to be moving ahead for future development. GMB Realty Partners is currently named as a possible Joint Development Partner. GMB Realty Partners estimates that the total project cost will be approximately $13,000,000 $15,000,000.

When the actual development will happen is anyone’s guess, with the state of our economy, the Harbor District will have its challenges for sure.

According to the Institute for Luxury Home Marketing, “(a)bout 10% of the affluent say they will seriously consider acquiring access to a vacation home during the next 12 months. Plans to make an acquisition increase as age declines, income increases, and net worth increases. About 2.9% are considering two types of vacation home acquisition. Wholly-owned homes are the most favored type of vacation home access. Wholly-owned homes used primarily on a seasonal basis are more popular than those used frequently throughout the year. The only exceptions are the 50 to 59 age group, the under $200K income group, and the lowest net worth group.”

So, if you happen to fall into the category of someone who wants to purchase a luxury vacation home over the next year, take a look at what we have to offer in San Luis Obispo County.  It’s like living in paradise!

As for the activity or stats, our Central Coast Multiple Listing Service shows there are currently 63 homes over $2,000,000 in San Luis Obispo County for sale. Only two are showing pending in the MLS as of the end of April, 2011, but five have already closed escrow in 2011. Under the $2,000,000 range, from $1,000,000 to $2,000,000, the sales number five times that amount, at 26 sales this year. We predict this number will continue to rise due to the timing of the year too.  Spring going into summer is notoriously the best time to be on the market.

I track the luxury market in San Luis Obispo County regularly and believe if a luxury home is priced right and marketed aggressively, property sales will continue to increase. As a graduate of The Institute for Luxury Home Marketing, I offer two very comprehensive luxury home marketing plan from which to choose.

Related articles: Pricing Your Luxury Home

Sunset at Shell Beach

With San Luis Obispo being named the “happiest place to live in the US,” all of San Luis Obispo County is on the map for purchasing real estate. Having traveled from one side the US to the other, I have yet to find a better place to live, with its fantastic weather, beauty and so many things to explore.

Bluffs at Shell Beach

Luxury homes are showing some sales and that interest appears to be heading upwards. In the county, Avila Beach alone has had three sales in the last three months, Pismo Beach and San Luis Obispo with 3, one in Oceano and one in Cayucos. All these homes were sold at $1,795,000 and above. For these sales, the average days on the market were 168 days, another good indicator of an improving market.

Currently on the market, our inventory of luxury homes above $1,500,000 number 93 properties, county wide. Of the 93 available, 39 have ocean views (a whopping 42%) and 15 are oceanfront homes. This is an incredible time to buy with lots of options to choose from. Looks like buyers will see this trend throughout 2011.

All homes noted are single family and do not include condos, and all these information are from the Multiple Listing Service on the Central Coast.

Eddie Stanfield / Certified Luxury Home Marketing Specialist

Avila Ridge

Investors know values and what little inventory means with supply and demand theory coming into place. I believe all three of these sales have been sold as cash transactions, plus add another one in December of 2010 at $2,400,000.

Are you starting to get the picture of how popular Avila Beach is becoming? Businesses are popping up this year at every corner, with at least half a dozen new starts projected in 2011 alone. Looks like it could be a banner year for Avila Beach, the future looks bright.

Shell Beach Bluff hike

How would you like to own an oceanview home near the happiest place in the United States? Well, you can have an oceanview just minutes from downtown San Luis Obispo. SLO was recently voted the happiest place to live by Yahoo!

Surrounding beach towns near SLO include what may be the best beach in the US, Avila Beach, the ever popular beach town of Cayucos, Morro Bay, Los Osos, Pismo Beach, Shell Beach, Grover Beach and Oceano. North of SLO also includes Cambria, and San Simeon. Avila Beach and Cayucos are south facing beaches and are noted to have the warmest weather, which also makes them the most popular and the most expensive to purchase. Going South from SLO, Avila Beach is less than 10 miles away from downtown SLO, Shell Beach at just under 9 miles, Pismo Beach at 11.5 miles, Grover Beach is 14.5 miles, and Oceano is 15.5 miles. Morro Bay and Los Osos are 13 and 10 miles away. Headed North, Cayucos is 19 miles and Cambria is 32 miles away, all very close (all approx miles).

Last count I had in February 2011 was 260 oceanview homes for sale in our MLS system in these areas. That’s a lot of choices! Of the 260, about 40 were oceanfront homes. So if you really want to live close to the happiest place in the US, but want an ocean view, you’re just a short drive away.

For more information, I specialize in oceanview and oceanfront homes on the Central Coast, give me a shout at 805-714-7558 or email me at eddie@eddiestanfield.com.

Heart's Desire Soap Co.

New establishments worth exploring are sprouting up all over Avila Beach. These are the new spa at the Lighthouse Suites, called The Spa Central Coast Avila Beach; Cuvee & Delights Champagne and Dessert Bar (coming soon  in April), a great alternative to our already popular wine tasting in Downtown; and Hearts Desire Soaps and Exotics, a herbal skin care and soap specialty shop. Joanne at Hearts Desire is also adding a new iced tea option, which I’m sure will be a big hit on our warm summer days. These three fresh businesses bring new growth and excitement to the new Avila Beach downtown area just in time for our busy summer season.

Avila Spa

Starting April 1, our popular downtown Farmers Market opens for 2011. If you haven’t attended this market, you’re missing out big time. Featuring fresh seafood, fruits and veggies to pick from, plus all the local vendors selling delicious food while you listen to live music, you may not find a better venue to enjoy the ocean than downtown Avila Beach. Each week features a different band through September.

The farmers market has grown to be an extremely popular event, so come early in order to find a parking spot. Many find this event a great time to relax, eat, listen to music and enjoy the sunset.

Here are the three challenges that you may face when building a custom home in San Luis Obispo County:
1) If you are building in a rural area, opposed to within city limits, you’re faced with additional restrictions and costs. Obstacles such as providing potable water, sewer and road access are the main ones, and all these affect your building costs. Rural areas require drilling a water well that produces minimum of 2.5 Gallons per minute (GPM), a building code requirement. In drilling a well, the costs mount quickly depending on first, finding water and the depth needed to provide ample supply to meet the GPM requirements. To provide sewer, you will need to have a percolation test submitted to the county with your plans. A soil test, or percolation test, is required to determine what type of septic system will be necessary for your new septic system. The permeability of the soil is determined by a percolation, or perk, test. Road requirements include having Cal Fire address accessibility for a road for a fire truck, possibly costing thousands to meet building permit standards. If there is no power (electric) on the lot or parcel, the costs to get power to your building site can be astronomical.

2) Costs to build vary substantially. These depend on building in rural or within city limits. As an example, to build a 2500 square foot home (city limits) permit costs start at $12,000. Included but not limited to these fees are inspection fees, plan check fees, Cal Fire fees and public facility fees. In the city you shouldn’t have to deal with road fees and an environmental review. On utilities, most city lots or parcels have utilities already at the curb, thus saving thousands of dollars. Building rural is another story as you will need to provide water with a water well, electric and sewer, adding a ton of cost from the very beginning. If your rural lot has a 10%+ slope (grading plan), that could add an additional $3500.00 and lots of time (delays) by needing a mandatory grading plan.

3) Time also varies. The planning & checking department with the county normally takes 6-8 weeks minimum, with no hiccups. Phase 1 of planning check deals with zoning and building code issues and takes minimum of 6 weeks. Phase 2 (resubmit), involves viewing all changes and revisions, takes another 1-2 weeks minimum. These are best case times that shouldn’t be counted on generally.

Building a custom home can be very rewarding. To avoid unnecessary stress that comes with it, know all your options and plan well ahead.