The luxury residential real estate market in the Florida Keys, particularly homes listed above $1.3 million, is seeing a shift towards alignment with broader real estate trends of the past year, reveals a recent report by Coldwell Banker Schmitt (CBS) Real Estate Co.
During the first quarter of 2023, luxury home sales fell by 28.6% yearly, while the market experienced a 39% drop. Interestingly, the average sale price in the luxury segment declined by more than 5%, contrasting with the less than 1% decrease in the overall market, as per CBS's findings.
The time taken to sell luxury properties also saw an upward trend, increasing by over 30% against a 25% rise in the overall market. Furthermore, inventories of unsold luxury homes swelled by nearly 65%, outpacing the 27% increase seen in the overall market.
Sellers Resist Market Realities
Despite these conspicuous market trends, sellers appear reluctant to face the realities of the changing market landscape, with average list prices rising for both luxury and the broader market.
"Signs are also clear for the coming quarter, with a significant drop in pending sales at the close of Q1, down over 40% for the overall market and 29% for luxury. These figures are likely to fuel the year-over-year declines observed so far," the CBS analysis asserts.
A unique characteristic of this current normalization phase in the Florida Keys' luxury housing market is the scarcity of motivated sellers. This shortage could potentially act as a stabilizing force against major price swings, keeping the market steadier amidst the broader changes underway.
The luxury market is traditionally less impacted by interest rate changes, with a higher proportion of cash transactions. Thus, the current downturn can only partially be attributed to the Federal Reserve's efforts to control inflation.
The analysis concludes, "Several subtler and more complex factors are at play, including a more cautious attitude towards the economy and prices. Given the low inventories and substantial equity in luxury properties, sellers do not hesitate to offload their assets."