The Million-Dollar Sale

As the housing market continues its slow climb from the grip of the Great Recession, one segment of the housing market may surprise some. It’s million-dollar homes.

You might call it ironic. While overall home sales along the Wasatch Front last year dropped, sales of homes priced in the seven-figure range actually increased. In fact, million-dollar home sales along the Wasatch Front posted a 12 percent rise in 2010 compared to the previous year while total sales of all homes during the same period dipped 9 percent.

Shelly Tripp, a REALTOR® with Coldwell Banker, said wealthier home buyers know there has been a huge drop in prices above the $1 million mark. Therefore, they are buying. “They want to get these deals before they are gone,” Tripp said. “They can’t build for the prices they are seeing.”

DeAnna Dipo, President of the Salt Lake Board of REALTORS®, said the trend speaks to the luxury home market and shows that some high-end properties are insulated from the housing downturn. “Buyers in the million-dollar price range are getting incredible deals,” Dipo said. “This is not only a Wasatch Front trend, but a national phenomenon. Sales of U.S. homes over the $1 million mark rose 5.1 percent in March (year over year), according to the National Association of Realtors.”

In March a Russian billionaire paid $100 million cash for a home in Los Altos Hills, Calif., the highest price ever paid in the U.S. for a single-family home, according to the Wall Street Journal.

What’s more, it appears more people are paying cash when buying high-end properties along the Wasatch Front. Of the 91 homes that sold at $1 million or more in 2010, 38 percent of the transactions were paid for in cash. In 2009, 30 percent were cash deals.

Mark Wilkinson, branch broker for Prudential Utah Real Estate in Alpine, sold three million-dollar homes in 2010. One of those deals, a $2.4 million home sold in less than 90 days. All three of his deals were cash transactions. In 2009, Wilkinson sold two homes above the million-dollar mark.

Nearly all home buyers in the million-dollar price range are locals, Wilkinson said. The most popular areas in Utah County for these homes can be found in the River Bottoms in Provo and Berkshires in Orem. Alpine also has its fair share of million-dollar home sales. Yet, Salt Lake County is the place where most million-dollar homes sell. About three out of four sales above $1 million in 2010 occurred in places like Holladay, Olympus Cove and Pepperwood.

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In absolute numbers, the upswing in million-dollar home sales is not overwhelming. There were only 10 additional sales of million-dollar properties along the Wasatch Front in 2010 compared to 2009. That doesn’t impress Wilkinson, who in a good year sells 10-12 homes priced in the seven-figures.

Still, Wilkinson acknowledges that he has seen a strengthening of showings in the $1 million plus range. “I don’t know if there is definitely an upswing,” Wilkinson said. “I think people thought that the market was not going to go down any further and decided that they ought to make their move.”

Even though million-dollar homes are showing an uptick in sales, Wilkinson reminds wealthy home sellers that the market is driven by price. He points to one home in Alpine that has sat on the market for more than four years. “The asking price is $2.7 million,” Wilkinson said. “He’s just way overpriced.”

Wilkinson agrees with Tripp that upper-end home owners have offered steep discounts to move their properties, in some cases as much as 30 to 50 percent. “I just listed a house for $1.6 million in Alpine that has a three-bedroom, two-bath apartment in the house; separate pool house/guest house with a kitchen; and valley views,” Wilkinson said. “I’ve been showing it pretty regularly. This home probably would have sold for $2.4 million in 2007 (33 percent more than today).”

Mike Lindsay, a REALTOR® with Coldwell Banker Residential, said million-dollar properties that have a beautiful city view or unique architectural feature are seeing more activity today.

“They are looking for new, fresh and up-to-date,” Lindsay said. “Because of the large number of homes available over $1 million, buyers are looking for the house that offers the most. If there is a specific unique feature, it will ensure that house will sell.”

Lindsay said decluttering and fresh paint go a long way in selling any home, but especially high-end properties. “I just listed one yesterday, it was full of clutter,” Lindsay said. “I asked him to repaint the front doors and side doors and delete as many personal objects as possible.”

Buyers in this price range want everything, including the latest and greatest features and all the upgrades, said Wilkinson, who suggests that sellers price aggressively and get a certified appraisal. The median price for homes selling above $1 million in 2010 was $172 per square foot.

“You can get a really nice home for $172 a square foot,” Wilkinson said.

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Shelly Tripp has sold homes for 22 years. Her clients are accustomed to buying upper-end homes. She lives in Pepperwood in Sandy.

Q: Have you sold any homes above the million-dollar mark this year?
A: No, but I have two that are currently under contract

Q: Is $172 per square foot a good deal for a million-dollar home?
A: Yes, especially if it is on some property. I have seen some million-dollar homes sell for as little as the low $100 price per square foot range.

Q: Does the increase in million-dollar home sales mean home owners in this price range can raise their asking prices?
A: No. The reason these homes are selling is because many of them have already undergone steep discounts of 30 to 50 percent. I have one listing in SunCrest where the owner has dropped his price to $1.1 million from $1.9 million, a 40 percent discount. You can’t build his home for what he is asking for it. That’s why people are buying existing homes. Buyers can’t build a home for the price that many sellers are now asking.

Q: What surprises your clients when it comes to today’s housing market?
A: A lot of buyers think they are the only ones out there and they hesitate to buy. But people are buying and buyers need to act if they want to get a deal. Buyers are surprised that there are sometimes multiple offers on properties. Sometimes they miss out on a deal. Sellers are hearing that sales are up and they think that they can increase their price. The reason sales are increasing is that prices are more in line with what buyers can afford.

Q: What is the greatest strength of Salt Lake’s housing market?
A: We have businesses coming to the Salt Lake area and people are buying. Our neighborhoods are more family-oriented. People love our beautiful mountains and they like the seasons. We can go skiing, hiking and boating all within minutes of most neighborhoods. You get a lot of house for your money.

Dave Anderton was a newspaper journalist for more than 10 years and is the communications director for the Salt Lake Board of REALTORS®.