Metro Detroit luxury home sales rebound, but at bargain prices

Detroit News
News - Local DetroitJuly 13, 2011

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A home for sale on Kingsley Manor Drive in Bloomfield Hills. List price: $4.5 million. Sale price: $1.8 million. (David Coates / The Detroit News)
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A home for sale on Kingsley Manor Drive in Bloomfield Hills. List price: $4.5 million. Sale price: $1.8 million. (David Coates / The Detroit News)

Louis Aguilar, Detroit News staff writer

Sales of $1 million-plus homes in Metro Detroit are brisk again after two years of stagnation, according to industry analyses and local real estate agents.

But it's a painful recovery: Prices have been slashed. Sales have not returned to levels seen before the housing crash and economic recession. And most luxury houses have been on the market sometimes for several years.

Examples of the discounts buyers have gotten or could receive on high-end homes in the past six months include:

A Bloomfield Hills home originally listed at $7.9 million sold for $1.7 million in January — a nearly 80 percent markdown. It was on the market for 3 1/2 years.

A Bloomfield Township house stayed on the market for 4 1/2 years before being sold in February at a 70 percent discount of $1.87 million.

In Grosse Ile, an estate formerly owned by the late auto aftermarket magnate Heinz Prechter was listed at $11.2 million in 2004. The current asking price is $5.2 million.

"People have succumbed," said Marie Sexton, a West Bloomfield Realtor for Re/Max Property Source. She has sold three $1 million-plus homes so far this year. It is common for sellers to cut half a million dollars off their original asking price, Sexton said.

"(Sellers) have admitted this is where prices are going to stay for a while — no more holding on for a price that you could have gotten a few years ago. It's time to finally sell. But also buy at an incredible bargain, too," she said.

In 2008, sales of million-dollar houses in Macomb, Oakland and Wayne counties plunged to 54 and 2009 wasn't much better with a total of 65 sales, according to statistics from Realcomp II Ltd., a Farmington Hills real estate information company.

Last year, sales improved 42 percent when 92 properties were bought. This was a marked contrast with overall home sales in Metro Detroit, which fell 8.6 percent in 2010 compared with the prior year, according to Realcomp.

(The Detroit News)
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(The Detroit News)

Agents optimistic for 2011

So far through June of this year, 45 houses have been sold for $1 million or more in the three-county region, according to Realcomp. That's about the same as the 44 high-end homes sold during the same six-month period last year.

Several real estate agents said they hope more than 100 high-end properties can be sold in Metro Detroit this year, a number not hit since 2006.

"This year, we've got many more clients finally out looking again at properties, even compared with last year," said Ronni Keating, a Realtor with SKBK/Sotheby's International Realty in Birmingham.

"It's confidence in the economy, interest rates are at an all-time low, (and) prices are never going to be better."

The lion's share of sales activity of $1 million-plus homes is in Oakland County, where 83 high-end properties were purchased in 2010 compared with seven luxury homes in Wayne County and two in Macomb County, according to Realcomp.

"It's the same story. The auto industry has stabilized, and that means everything else is stabilizing," said Realtor Nanci Rands.

She and Meredith Rands Colburn, both associate brokers at Birmingham's Hall & Hunter Realtors, are "very, very busy this year," Rands said.

Many sellers have had their properties on the market for months.

For homes that sold for $1.5 million this year in Oakland County, the properties sat on the market for an average of 254 days, according to data provided by Sexton.

Amenities can drive sales

The average selling price of the Oakland houses was $1.8 million. The average listing price was $2.2 million.

This was a decline from 2010, when the average selling price was $2.3 million and the average listing price was $2.8 million, Sexton said. Average days on the market: 300 or nearly two months shy of a year.

In comparison, the median price of a home in Metro Detroit was $65,000 in June, the latest monthly data available, down 13 percent from a year ago, according to Realcomp.

When prices are competitive, what sells a luxury home are its amenities, Rands said.

"This is for people who enjoy a lifestyle that they can share with others," said Rands as she recently showed off a $4.2 million English Tudor home in Franklin Village. The amenities include a two-story library, multiple fireplaces, a wine cellar, swirling staircases, a pond with a fountain and a gym.

"Many of our clients have made the choice that they want to stay in the area," Rands said. "They can live comfortably."