If you’re considering a foray from the general real estate market to luxury, this is still a good time to make the shift. However, how you apply your Arizona commercial private loans and the strategies you employ will need to pivot too.
In November 2018, mortgage rates hit their highest peak since 2011, per data from Macrotrends. This, paired with the uncertainty of the economy and increasing values, resulted in a lull in the luxury market. Many forecasters predicted the luxury would outright stall in 2019, but that’s not necessarily what we’re seeing. So far this year, mortgage rates have dropped three-quarters of a percent and worries of the economy are diminishing. Although these factors don’t impact Arizona commercial private loans, they do impact your buyers, and thus, your ability to earn.
Coldwell Banker pieced together a report on the 2019 luxury real estate market which highlighted the hottest markets to sell in. LA Valley came out in first, with the median average sold price to list price at 97.6% for single-family homes and 100% for condos. Median sold prices were $2,073,122 and $747,500, respectively, with median days on the market sitting at 45 and 36. Maui came in first for buyers, a rank which was heavily influenced by the high median days on market, with homes at 206 days and condos at 162. Median SP/LP% was also a leading factor, with homes at 92.7% and condos at 97.2%.
Of course, not everyone will want to head to these markets. The good news is, there’s plenty of opportunity elsewhere. For example, those hoping to get a deal when buying in Arizona could have more bargaining power where homes stay on the market an average of 141 days in Scottsdale and 146 in Paradise Valley, and the median SP/LP% sits in the 94-95% range. Texas has similar trends. As a buyer, you’ll benefit from a SP/LP% of around 96%, though selling will be easier at 52 days on the market in Dallas and Houston.
Knowing How to Make Money in the Luxury Market Requires a Shift in Thinking
First and foremost, savvy investors devote more energy to valuations. In the general market, it’s easier to determine the value of a property. When doing a comparative analysis, you may be looking for properties with features like pools and granite countertops, but chances are, you’ll find homes that are nearly identical to the one you’re considering. With the luxury market, you probably won’t. The discerning homeowner expects his or her property to be unique and fit specific lifestyle requirements. Some investors go as far as to tour homes they have no intention of buying just to make notes of the features for their comps. Others phone agents who have recently sold to get specific information. Savvy investors give themselves more time to make an exit as well. Depending on the market, it could take four or five months to get a buyer right now. Because Arizona commercial private loans are short-term, it’s important to be able to exit when the term ends. However, some of this comes down to your marketing, and that’s the third thing many people making the shift overlook. Your elite clients don’t buy homes the same way others do. Networking and getting the word out is key.
If you can adapt your style, you can make money in the luxury market today.
Clearly, the luxury market is still hot for investors. Arizona commercial private loans can pave the way to a lucrative career, though you’ll need to nail the details to maximize profits.
Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com
Dennis Dahlberg Broker/RI/CEO
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.
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