Consistent with the 2022/2023 Market Review we define the defined the luxury market as homes which sold for $2.5 million or above.
In recent years, the luxury market in Lexington has been very strong. This is shown by the key performance metrics Days on Market and Sale Price to List Price Ratio strengthening, and by an increase in the number of homes sold. In 2023 these performance metrics declined, consistent with the overall weaker housing market. Given the large number of new construction homes in the over $2.5 million price range and the oversupply of these homes listed in 2023 the Days on Market and Sales Price to List Price Ratios declined markedly. The number of homes sold in the luxury market in 2023 was 49 compared to 55 in 2022 – an 11% decrease. This should be viewed against the overall housing market that saw a 13% reduction in the number of home sales.
Many sellers of existing homes worry about the impact of new construction on the luxury market. The primary impact of these new homes is that buyers of existing homes will expect a similar quality to new construction. Given the characteristics of the luxury market and the new construction component of it, it’s important to focus on the fundamentals – home preparation, great staging, a comprehensive marketing plan, and the right pricing strategy are key to having buyers consider an existing home versus new construction and obtaining the maximum price for your home.
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The number of homes sold in the luxury market in 2023 was 49 compared to 55 in 2022 – an 11% decrease (consistent with the overall market). The luxury market in Lexington outperformed the overall luxury housing market in Massachusetts in terms of the net reduction in home sales. In 2022 937 luxury homes were sold in Massachusetts. In 2023 only 741 luxury homes were sold, a 21% decrease over 2022.
The Days on Market for the luxury market was relatively high at 82 days when compared to the overall market but is consistent with the years immediately before COVID. In 2022 the average days on market was 40, in 2023 this increased over 50% to 82 days. As noted in the luxury home sales section this increase in days on market can in part be explained by the 2022 oversupply (over build) in the new construction market where homes built in 2022 did not sell until 2023.
The most noticeable trend in the sale price distribution is the decrease in the number of $2.5 - $3 million priced homes. Looking closer at the luxury market data highlights a worrying trend. 48 $3+ million homes were listed in 2023. 27 $3+ million homes were sold or went under contract in 2023, 4 of these were listed in 2022. This means that only 50% of the $3+ million homes listed in 2023 were sold, it is very likely these unsold homes will come back on the market in 2024 putting downward pressure on prices in the sector of the housing market.
