Luxury Market Price Gap

A unique pricing gap has developed in Tucson’s mid to upper-end luxury housing market. This gap is the difference between a Seller’s list price and the Buyer’s evaluation of that home’s market value determined by looking at comparable sales. Much of this disparity is due to the comparable homes which have sold being “distressed sales” in either the traditional sense of foreclosures & short sales, or simply a Seller who REALLY wanted or needed to sell. What makes this gap unique & challenging is that both the Seller and Buyer in this situation have very little impetus to act. In contrast to the homes that have sold, these owners are NOT forced to sell and can elect to “wait it out”. The Buyers on the other side are most frequently buying these as second/seasonal homes & also don’t have any urgency to “have” to buy.

Further muddying the waters in this price gap is the metric of price per square foot. For custom homes this is not necessarily the best way to compare homes in a neighborhood without accounting for often vast differences in lots, finishes, architecture, building materials, etc. However, this is the most readily available comparative measuring tool and is often the Buyer’s only visible method of comparison. It also ties in nicely if the Buyer is comparing whether to build a new, custom home as a builder will also readily quote a $/sq. ft. number for a given level of finishes, although until specifics are finalized that’s always a floating target.

Ultimately for these luxury resale & spec homes on the market it will take Sellers realizing that if they truly want to sell, the price must be within, at minimum, the upper range of market comparables. Buyers looking for just the right home may also eventually start paying a little bit of a premium when the perfect home crosses their path too. A little give and take on both sides is what ultimately will help bridge this gap.

Stephen Woodall
REALTOR, GRI @ Long Realty Company
Stephen has made real estate his full-time career and passion since 2008, primarily specializing in the Foothills & the Northwest Tucson areas of Oro Valley and Marana. He is a multi-million dollar producer, representing both sellers & buyers. Stephen has tremendous experience in new home sales, listing & selling primary residences, listing & selling vacant land, listing & selling luxury homes, investment properties, rentals, and real estate development parcels.

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