Demand for homes over $1 million is less than rich
home.post-dispatch.com
By Barbara Hertenstein Of The Post-Dispatch
* More than 90 are for sale here, and agents say the dip in the
stock market has made buyers scarce.
If you're looking for your dream house, it's probably on the market
this summer, complete with tennis court, swimming pool, wine
cellar and more. More than 90 $1 million-plus homes are for sale
here, but because of the falling stock market, buyers are scarce.
That means more million-dollar houses are on the market than
usual -- possibly more than ever before, agents say. Some of the
reasons are:
* Buyers who would need to cash in stock don't want to do it now.
* Some people who have lost money in the market have to sell.
* Corporations aren't moving as many people into town.
* Some high-end houses are overpriced.
In the first half of this year, 37 homes costing at least $1 million
were sold, compared with 80 for the same period last year in
Clayton, Ladue, Town and Country and Frontenac, says Kathy
Beilein, general manager for Laura McCarthy Real Estate.
Ted Thornhill, president of Janet McAfee Real Estate, says, "The
stock market has greatly deflated the comfort level of the buyer."
The average list prices and sale prices in Ladue and Clayton have
gone down by 5 percent this year, says Stafford Manion of Gladys
Manion Inc.
"What this is telling me is there aren't as many $2 (million) and $3
million homes selling as before," Manion says. "There aren't that
many big trades this year."
The homes listed are in St. Louis and central and west St. Louis
County, including Ladue, Clayton, Frontenac, Town and Country,
Wildwood and properties west of Clarkson Road, in the Parkway
and Rockwood school districts. About 45 of them are in Ladue.
"The drop started the last quarter of 2000," says Anne Ryan of
Coldwell Banker. "I think what has occurred is buyers have looked
at their portfolio and just pulled back to wait and see."
Judy Andrews' two-story brick house at 1 Warridge Estates just off
Warson Road in Ladue has been on the market since September.
Priced originally at $1,140,000, it dropped to $999,000 and is now
$975,000. Andrews does not have a deadline to sell.
"I'll be moving to Chicago or New York," Andrews says. "I haven't
decided yet." But meanwhile, she can shuttle between St. Louis
and her son's condo in Chicago, which is empty while he works in
London for a year or two. The family has lived in Warridge Estates
for 20 years. But now that her children have grown and moved
away, she doesn't need the spacious four-bedroom house with a
pool and three-acre yard to maintain.
"It was a great house, but I'm ready for a change," Andrews says.
"I'm tired of waiting. I'm ready to do it."
Her agent, Katie Dooley of Janet McAfee, has shown the house to
about 20 people. Andrews sees a theme in those who look but
don't buy: "Nine out of 10 blame it on the stock market."
Buyers have more choice
The surplus of high-end homes "has created a buying opportunity
here that we probably haven't seen since 1999," Thornhill says.
Yet Sarah Bakewell of Edward L. Bakewell Inc. says one client
looked at all 40-plus high-end houses on the market this summer
and still couldn't find the perfect fit. "Not for the right price. So we
are contacting people we know are considering selling but haven't
put their house on the market yet."
What do you get for a million dollars or more?
Picture a large house on an expansive lawn in an upscale
neighborhood. Add a swimming pool and tennis court, and perhaps
some attractive extra structures such as a pool house and garage
space for all your cars.
Inside, amenities might include a high-tech media room wired for
movie projection, a wine cellar complete with tasting room, an
elaborate lower level complete with family or media room, kitchen,
bedrooms and baths. A master suite, with large his and hers
closets and a huge bath, probably with whirlpool and shower, is a
must. Elsewhere you'll find granite countertops, marble floors,
five-piece crown molding, zoned heating and cooling, and
whole-house sound systems. Floors, wallcoverings and detailing
should all be top-of-the-line. The kitchen's up-to-date appliances
are probably tucked inside elaborate cabinets. A separate caterer's
kitchen is a nice extra.
"How easy it is to entertain, both formally and casually, is very
important," says Joanne Barkley of Gladys Manion. "That means a
kitchen and large hearth room for the casual parties and a dining
room for more formal entertaining."
In contrast to million-plus houses, lower-priced houses are selling
well. Sales for houses in the $250,000 to $500,000 price range are
off only 3 percent here, Beilein says. The average price for a house
in the St. Louis area is $152,900; in the Metro East area, the
average price is about $138,000.
Nationally, sales of $1 million-plus homes dropped 15 percent in
the first five months of this year, compared with a 7 percent
decline for home sales in general, according to a DataQuick
Information Systems survey published in USA Today.
Are houses overpriced?
Some high-end houses are priced too high, real estate executives
say.
"Some people's expectations are out of whack," Manion says.
"Everybody focuses on the situation where the house sold in one
day for a big price. It doesn't happen every time. When it happens,
the match was perfect between the house and buyer. It really fits,
it lights up his wife, and the kids love it.
"In some cases, where some people are now asking $3 million, the
house is really worth $2 million," Manion says. "And that, along
with the stock market, means those houses are doing poorly."
Thornhill says houses need to be priced for this year's market.
"I think that it is a mistake for agents to use property sold in 2000
(to price) property in '01," Thornhill says. "The market conditions
are not as strong. If you take comparisons from a market that was
very strong, in a market that isn't, the price is going to be too
high."
People who plan to liquidate stock to buy expensive houses are
simply waiting, but those getting loans are finding appealing
mortgage rates.
"This year, the meat of the market, probably through March, was in
the $250,000 to $400,000 price range," Beilein says. "But our
average sale price has gone up, meaning the momentum for the
more expensive homes has been growing. But we have months
and months of supply."
The $400,000 house is going up in value, Manion says. Many
buyers moving up from $300,000 to $500,000, the majority of
increases in house sales, are getting loans rather than selling
stock for the purchase. "All they're looking at is the payment,"
Manion says. "And it's a very good time to go out and borrow
long-term money."
Old or new?
You can spend a million or more on an old house or a new one. The
choice has to do with taste and geography. High-end buyers who
want to live in far West County have almost exclusively new
houses to choose from. On the other hand, Ladue and Clayton
buyers can choose from a mixture.
"The Clayton town home market is very strong because there is a
very limited supply," Thornhill says. "Clayton is doing extremely
well. It always has. It's a wonderful place to live and raise a
family."
Those buyers who like older homes usually want modern
amenities. "The floor plans are so different today from the 1920s
or '30s," says Bakewell. If they buy an older home, they're looking
at adding those big rooms (that people like today)."
Many buyers spending more than $1 million choose a new house,
rather than reconfigure an old one, Bakewell says. Some new
subdivisions feature $1 million-plus homes on two-thirds of an
acre. "A lot of people like the smaller lots," Bakewell says. "They
want more disposable free time."
Buyers who like the older homes in Clayton and Ladue are looking
for fine appointments, but with new kitchens and baths, says Raye
Zeigler, agent with Janet McAfee.
"They want a fresh look with good bones," she says. And they
want everything completed. "People are not into work."
In years past, people didn't have many choices in the upper price
range.
"We didn't have a surplus of houses at a million," Zeigler says. "A
good house -- and I emphasize good -- in a million-dollar range
could sell the first day. You might have several contracts on it."
One of the first in that category sold six or seven years ago on
country club grounds for about $2 million. "That was the beginning
of the upshot of prices in Ladue," she says.
Out-of-town buyers
The out-of-town buyer is a sought-after person for the seller,
Thornhill says.
"These people need to buy, and they probably have a time limit,"
he says. "Depending where they are coming from, St. Louis is a
wonderful place to buy, a wonderful place to raise a family."
But Bakewell says: "We're not getting the influx of people coming
into St. Louis that we once had. I think corporate relocation is
slowing down. It's a constant struggle for any city to keep their
corporate people."
But no matter how many houses are available, agents are still
looking for that perfect house for their client.
"You would think with 43 (million-plus) houses on the market
people could find one, but we have agents calling all the time
asking if anything new is coming on the market," Beilein says.
"Many of those buyers seem to be out-of-towners. They're not
buying in a vacuum, but people come here from San Francisco and
New York, and they're elated."
========
Average home sale prices in the last 12 months:
St. Louis area: $152,900
Ladue: $677,276
Frontenac: $661,658
Town and Country: $587,836
Clayton: $568,676
Chesterfield: $329,026
Source: MidAmerica Regional Information Systems, which provides
the real estate Multiple Listing Service for the St. Louis area.
Reporter Barbara Hertenstein:
E-mail: bhertenstein@post-dispatch.com
Phone: 314-340-8236
Published in A-section on Sunday, August 5, 2001. |
