The Wall Street Journal - 16.08.2019

M 6 |Friday, August 16, 201 9 THE WALL STREETJOURNAL. THE WALL STREETJOURNAL. Friday, August 16, 2019|M7

condo right off the Pearl Street Mall in

downtown challenging. The 54-year-old film-

maker will need roughly$1.5 million to get

what she and her husband want—and she’ll

still have to renovate, she said. But theyare

also selling into this market. The 5,500-

square-foot house they built in the heart of

town is listed for$5 million. Houses like

theirs, near both hiking and shopping, “have

a good chance of selling,” said Ms. Berbe-

rian’s listing agent Karen Bernardi of the

BernardiGroup at Coldwell Banker.

Joe Gruttadauria, a 59-year-old software

executivein Pompano Beach,Fla.,is also

both a buyer and sellerin a seller’s market.

He bought a waterfront condominium in a

luxury building in 2011 for$1.2 million. To-

day, he has it on the market for$2.2 mil-

lion,aprice that reflects local development

as well as the healthy seller’s market in

surrounding Broward County, which in-

cludes Fort Lauderdale.

He is also looking for a smaller condo

notjustin the same strong market butin

the same building, near the$1.1 million

mark. His game plan is to work with agent

Ed Cook of Continental Properties,who

lives in the building, to scope out units be-

fore they come to market.

“The best way for me to grab a good

Continued from page M1

Renée Berberian’s

Boulder,Colo.,

home, top,isin

one of the top

seller’s markets in

the country. She‘d

like to buya

downtown

Boulder condo.

WHAT

IS A

SELLER’S

MARKET?

In this analysis,a

seller’smarket

means:

Themarkethas

more demand than

supply, with low

levels of inventory

and a high absorp-

tion rate.

Salesprices in

the top5% of the

market are grow-

ing at or above 4%

yearoveryear.

Positive yearly

percentage change

inboth$1 million

sales and absorp-

tion rates

Realtor.com ana-

lyzeddatafrom

January to theend

ofApril 2019, in

marketswithat

least 30 monthly

listings on average

andatleastthree

monthly$1 million

sales.

WHATISAHOT

SECOND-HOME

MARKET?

In this analysis, ahot

second-home market means:

Cities where 10%ormore

ofpurchases arefor second

homes

Thetop5%pricebandis

higher than the nationaltop

5%priceband.

A typicallisting receivesa

higher number ofviews on

Realtor.com and sellsfaster

than inother markets.

Data was analyzedbetween

July2018andJune 2019.

Karen Labattowaited

years for this. Ms. La-

batto, who boughta

housein Southamp-

ton’s village area 10

years ago, has been

looking for a larger, move-up house ever

since. She found the propertyshe wanted

in the Estates neighborhood. Originally

priced at$15 million,its price had been

lowered to just under$11 million by2017.

Two years of negotiation ensued.

Then, things started to change, said

Ms. Labatto’s agent, Erica Grossman of

Douglas Elliman. New York’s Suffolk

County, which includes the tonyHamp-

tons, is today among the most dramatic

luxurybuyer’s markets in the country.

Since the second quarter of 2018,inven-

tory in the Hamptons is up 84.2%, ac-

cording to a recent Elliman report.

That created opportunity for Ms. Lab-

atto, who finally closed on her target

property in October for$8 million. She

tore the house down and is now building a

1 2,000-square-foot, empty-nester home

with a master bedroom on the ground

floor,she said.

Theterm“buyer’s market” canbecon-

fusing: It refers to places where there is

more supplythan demand, but doesn’t

necessarilymean places where propertyis

cheap. On Maui,for example,there is an

overhang of inventory over$1 million. But

that is mostly because many condos are

both outdated and expensive, said Ryan

MacLaughlin, co-owner of Island Sotheby’s

International Realty.

This fall, Thomas G. and Joyce M.

Fitzgerald were looking for homes in Na-

ples, Fla. Collier County, where Naples is

located, is a buyer’s market. But the

Fitzgeralds weren’t exactly encountering

fire-saleprices.

Karen Van Arsdale, their agent at Pre-

mier Sotheby’s International Realty,

“showed us about 15 homes priced from

$6.5 million to$15.9 million,” said Mr.

Fitzgerald, 66, a retired banker and law-

yer. “The lower-priced homes were nice,

but not on the water.” They found a house

listed for$10.95 million in a gated commu-

nity near downtown and got it for$9. 6

million.

In wealthy vacation-home markets, like

Maui, the Florida Keys or the Hamptons, it

can take a long time before a pile upinin-

ventory starts leading to price reductions,

because many homeowners paid cash and

don’t feel pressure to sell, saidWill Lang-

ley, principal broker at Berkshire Hatha-

way Keys Real Estate. However, an aging

buyer’s market should eventually lead toa

downturn inprices.

“In six months, you’re going to start to

see price reductions,” said Mr. MacLaugh-

lin,in Maui, particularlyin condos builtin

the 197 0 sand 1980 sthat needwork—

which is expensive on a Hawaiian island.

Sellers are quicker to discount prices

THE

BUYER’S

MARKET

Murrayand Anne Marie
Peretz haveowned a
homeon Lake Geneva
inWisconsinfor22
years, usingitasa
summer getaway from
their condoinChicago.
But when Clear Sky Lodge, a 100-year-old
log cabin lakefront estate came on the
market lastyear, theysuccumbed to the
fantasyit represented and boughtitfor
$5.2 million. Mr. Peretz, a 67-year-old com-
mercial real-estate executive,saidhewas
drawn toits woodsy, log-cabin style and
“iconic and special” feel.
Fantasyisabig motivator for buyers of
vacationhomes. Partof Realtor.com’s hot-
ness scoreis determined byhow many
times propertiesin the markets are
searched onits website. Lake Geneva,an
elegant second-home community where
luxuryhome prices start at $2.48 million,
is a place thatinspires much dreaming.
Linda Tonge, an agent with Keefe Real Es-
tate, recentlyclosed a deal for a client who
had been searching for 20 years, she said.
The veryhottest second-home destina-
tionis Palm Springs, Calif., once a retiree
and golf community that now hosts hip

THE

SECOND-

HOME

MARKET

Tony Halton, managing partner of desert

divisionof Halton Pardee.

Serious buyersin vacation areas should

vet agents carefully. These markets often

have tons ofinventory—KeyWest, for ex-

ample, landed on both our buyer’s mar-

kets list and hottest second-home markets

list. Knowledgeableinsiders are key to

separating motivated sellers from owners

just testing the market.

Merriah Harkins, 48 ,a sales and mar-

keting executive from Seattle, dreamed

about owning a placein Palm Springs,

but notjust anyhouse. She and her hus-

band Mark visited at least 100 properties

before spying a new listing for a $1. 4

million, 3 ,150-square-foot,modernist

three-bedroomhome.

They flew to Palm Springsimmediately

and offered full price, hoping to compen-

sate for the fact that theirofferincluded

afinancing contingencyin a market

awashin cash. TheyclosedinMayand are

now personalizing the house.

“Finding something we could both

agree on was harder, because a vacation

homeisawantinstead of a need,”said

Ms. Harkins. “We knew this was the one,

sowe acted fast.”

TIPS FOR

BUYING

IN A

SELLER’S

MARKET

Do the research.

Scour real-estate

websites and

pump agents for

data. Know what

has sold for what

price.

Pre-interview lo-

cal contractors. To

accept an as-is

house, you need to

ballpark how much

repairs will cost.

Getpreapproved.

If you don’t have

cash,show the

seller that financ-

ing is guaranteed.

Act fast. Check

for new listings

daily and call the

listing agent im-

mediately.

Waive contingen-

cies. It is scary,but

sometimes neces-

sary.

Writethe seller

aletter explaining

whyyoulove the

house.

JOSH RITCHIE FOR THE WALL STREET JOURNAL (POMPANO BEACH

,NAPLES)

;SARA STATHAS FOR THE WALL STREET JOURNAL (LAKE GENEVA)

;JASON HENRY FOR THE WALL STREET JOURNAL (WALNUT CREEK)

;DANTE PARDUCCI (MAUI)

;JULIE KRUGER (BOULDER)

;ROB WILSON (ILLUSTRATIONS)

WHAT

IS A

BUYER’S

MARKET?

In this analysis,

a buyer’s

market means:

The market

has more supply

than demand,

with high levels

of inventory and

relatively low

levels of sales.

Luxury sales

prices—the top

5 % of the mar-

ket—were grow-

ing less than 1%

or declining year

overyear.

Negative year-

over-year per-

centage change

inboth$1 million

sales and ab-

sorption rates

Markets have

at least 3 0

monthly listings

on average and

at least one

monthly$1 mil-

lion sale.

Realtor.com an-

alyzed data from

January to the

end of April 2019.

TIPS FOR

BUYING

IN A

BUYER’S

MARKET

Let the market

age. In the early

days of a buyer’s

market,inven-

tory piles up as

sellers continue

to demand yes-

terday’s prices.

With time,price

declineskickin.

Make offers.

Evenifitistoo

low,sellers are

often eager to

get a negotiation

started.

Concentrate.

Don’t bid on ev-

erythingjust be-

cause you can; la-

ser focus on what

you truly want.

Buy top loca-

tions. These will

be the firstprop-

erties to bounce

back in a recov-

ery.

Talktocontrac-

tors. In certain

markets, con-

structioncosts

are toohighto

make somefix-

ers gooddeals.

TIPS FOR BUYING

INASECOND-

HOME MARKET

Prove you’re serious. Get

preapprovedorhaveproofof

funds to show local agents

you’re not just adreamer.

Sign withabuyer’s agent.

They’ll searchfor you while

you’rebackhome.

Be open tofixers. Vacation-

homebuyers put a premium

on turnkey properties; ifyou’re

willing todowork, you might

find a bargain.

Bewarelocalanomalies. In

Palm Springs, manyhomes are

onleasedland,whichmeans

homeowners pay rent on the

lot.InKeyWest,all localcon-

tractors canbe tiedupwith

post-hurricane or storm work.

Buy offseason. Typically,

seasonalrenters makeupthe

biggestbuyer pool;shop when

there isless competition.

Elaine and Jeffrey

Burrell’snew

home in Walnut

Creek,Calif.,left

middle,is in a

profound seller’s

market. They

bought it with no

contingencies and

sent a letter to

woo the seller.

Thomas G. and

Joyce M.

Fitzgerald, right, in

their Naples., Fla.,

home. Thehome,

leftbottom,sitsin

Collier County, a

strongbuyer’s

market.

where local incomes have to justify prices.

In Cook County, Ill., several commuter ar-

eas to Chicago are strong buyer’s markets.

Many of the houses lingering on the mar-

ket are large, suburban dream homes, such

as a 6,900-square-foot Palladian villa-style

mansion listed for$1.075 million,said list-

ing agent Connie Antoniou, vice president

of sales at Jameson Sotheby’s Interna-

tional RealtyinChicago.

Drew Thaler, an operations manager,

hadjust over$1 million to spend in Bar-

rington, a town in Cook County, where he

and his wife relocated forwork with their

two young sons. The couple, both 39,

wasn’t tempted by the many mansions on

the market.

“An extra thousandortwothousand

square feet isjust more house to maintain,”

said Mr. Thaler,who also worried that a

larger suburbanhome would beharder to

resell. Instead, they bought a$1.15 million,

3,880-square-foot housein the village of

Barrington, walkable to groceries, parks,

and the train. They got the house for a dis-

count off the$1.250 million listprice and

included a contingency for closing on their

old home. They movedinmid-July.

“It is like being on vacation every day,”

said Mr. Thaler.

Top Buyer’s Markets by County

Rank Market Absorption Rate

1 Suffolk, NY 1.1%

2 Monroe, FL 2.2

3 Cook, IL 2.4

4 Honolulu, HI 4.0

5 Collier, FL 4.2

6 Sarasota, FL 4.2

7 Maui, HI 4.5

8 Montgomery, PA 4.7

9 Duval, FL 6.6

10 Philadelphia, PA 7.7

Source: Realtor.com

Absorptionrate:number of sales a month divided by number of listings/

rate listedis average of three ZIP Codes with lowest rate in each county

events like Coachella,the music festival,

plus activities focused on film,architecture

and fashion.

“We had a listing at $2.2 million and it

sold at the open house,”said Paul Kaplan

of Bennion Deville. The house,in escrow

now, hit the sweet spot for manybuyersin

Palm Springs: It was new construction,

modern-looking, and withinamile of

downtown.

Asin most vacation areas, buyers put a

premium on new or renovated homes that

will be easyto rent out short term, said

Ten Hottest Second-Home Markets

Rank Market Hotness Score

1 Palm Springs, CA 90.7

2 Nokomis, FL 75.15

3 Lake Geneva, WI 73.8

4 La Jolla, CA 72.35

5 Key West, FL 71.95

6 St. Petersburg, FL 67.1

7 Coeur d’Alene, ID 64.9

8 Jupiter, FL 64.6

9 Beach Haven, NJ 61.35

10 Kihei, HI 60.9

Source:Realtor.com

Murray andAnne Marie Peretzboughtthis Lake Geneva, Wis.,home, above andright, in ahot second-home market.

The 2019 Buyer’s Guide

priceis to keep my eyes open and find a

motivated seller,” Mr. Gruttadauria said.

As Ms. Burrell’s carefully executed strat-

egy demonstrates, there are ways to prevail

even in an extreme seller’s market. From

her apartmentin San Francisco,she started

scouring real-estate websites in August.

Next, she got fully preapproved for a loan.

Then, one day this spring, she awoke and

went right to Trulia. There she spied a house

that had been listedjust a few hours prior. It

was a charming, older, four-bedroom home

with a pool in Walnut Creek,priced at$1.1 5

million. Sheimmediately dialed listing agent

Laura WucherofJ.Rockcliff Realtors and

made an appointment to see the home be-

fore the weekend.

Ms. Burrell then brought her husband,

Jeffrey, a 32-year-old technology executive,

to the first, packed open house on Saturday.

They returned with her parents on Sunday.

Ms. Wucher got four offers on Tuesday

morning. The Burrells had no agent, so they

used one on Ms. Wucher’s team. They bid

$1.175 million and asked for no contingen-

cies—not even an inspection(the sellers

had done an inspection, so they relied on

that). They also wrote a letter to the seller

expounding on their

love for the house;as a

cherry on top, they

threw in their wedding

pictures. The sellers

asked to stay oninthe

house a couple of weeks

after closing—free.

“No problem,”was

Ms. Burrell’s response.

“In this market,you say

yes,” she said. Ms.

Wucher saidoffers were

higher than the Bur-

rells’,but their flexible

terms sealed the deal.

They got the housein

earlyMay.

Top Seller’s Markets by County

Rank Market Absorption Rate

1 Contra Costa, CA 61.5%

2 Sacramento, CA 59.8

3 Loudoun, VA 53.1

4 Pinellas, FL 35.7

5 Montgomery, MD 23.0

6 San Luis Obispo, CA 19.1

7 Placer, CA 15.6

8 Boulder, CO 11.0

9 Riverside, CA 9.4

10 Broward, FL 9.2

Source:Realtor.com

Absorptionrate:numberof sales a month divided by number of listings/

rate listedis average of three ZIP Codes with highest rate in each county

Joe Gruttadauria, above, athis Pompano Beach,Fla., condo, top

andbottom.

Boulder, Colo.

5,500 SQ FT

Cost to build (2007):

$1.175M for land,

$2.425M in build costs

Listed: $5M

SELLER’S

MARKET

MANSION