A look at the health of the housing market’
Washington Fine Properties is not a real estate agency for the masses. Half of the company’s business focuses on the upper end of the market, homes going for more than $1 million — the 1 percent, if you will.
In 2011, the company represented the buyers of the Evermay Estate, a home whose $22 million price tag represented an all-time record for the Washington area. The same buyers, it turns out, Ryuji Ueno and Sachiko Kuno, also bought the historic and high-priced Halcyon House for $11 million.
I talked to Washington Fine Properties president Tom Anderson about the upper, upper end of Washington’s real estate market.
Were you shocked that the same buyers (your clients) bought two of the most expensive homes in Washington last year? That must be something that happens once in a career.
Anderson: Yes. Because of all my years in the business, I’ve been familiar with the fact that sometimes your best buyer may buy multiple properties. The part that comes as a shock is that they often don’t buy them in the same town.
Or within, say a few months of each other?
Anderson: Yes. But it made sense to me once I understood what their interest was in both properties. They are heavily involved in their foundation. What the sales offer is the opportunity to have the property be more than just a residence.
Give me a profile of your customers. Who are they?
Anderson: Over 85 percent of our buyers are already in our market. Even though they may have a home in another market, they might be renting or involved in some political appointment or posjition [here]. They get comfortable, then they buy.
Without question the interest rates and availability of cash from the lending perspective is very appealing. Interest rates are at all-time low. Banks want to lend to buyers who have a portfolio, and at the upper end, the portfolios are very strong.
Explain to me the “Law of Millions” in high-end real estate. Why is it that when homes are priced over, say, $4 million, the price seems to drop by millions of dollars whereas the rest of us squabble over $10,000 or $20,000. How do the millions get shaved off so easily?
Anderson: It’s all based on comparable value. There’s never one price for one property. At the lower price ranges, there are more properties to compare and you can zero in on a tighter range. But as the price goes up, the range becomes wider. There are fewer homes at the upper end so it’s hard to draw a direct comparison. [When it comes time to make an offer] there is a business side of things in terms of what you feel comfortable spending. And there’s the more personal, emotional side of things; if you want something you might have to step up and be willing to negotiate.
What is your biggest concern in 2012?
Anderson: I’m most concerned as to the economic climate in those countries that are having such difficulty, with some of them near bankruptcy. I would hate to think what’s going on in the world economy could then filter into a more cautious environment in our economy. Last year [during Europe’s troubles] we had people who were interested in moving forward take pause. Then they sit and watch.
What is your outlook for this year? Many factors that contributed to uncertainty last year — the stock market, Europe, the federal government and the election year — still exist.
Anderson: I don’t see prices getting any stronger. Yet I see confidence in total sales. Pricing is going to remain at our current — our new level. I don’t think we’re going to see that go up until we see more inventory of homes coming on the market, and then we may see prices start to creep up.