A sudden end to the low-baller market will be soon seen across the U.S. Sunbelt, according to Vancouver-based Ross McCredie, president and CEO of Sotheby’s International Canada.
Sotheby’s concentrates on the top 40 per cent of the residential market and McCredie claims such U.S. sales are seeing a “significant increase” this year.
McCredie said sales of high-end homes are soaring in the U.S. Sunbelt and it is already “too late” to get a real deal in prime southern Florida. “Miami prices have shot up by $200 a square foot this year and it happened fast,” McCredie said in an interview with Western Investor.
Forget the $50,000 Phoenix condos, he said: the real value is upmarket. Arizona. Alberta and B.C. high rollers are buying in toney Scottsdale where you can find luxury houses at the exclusive Pinnacle Creek Country Club for $995,000.
“A house like that would be twice the price in Canada,” he said. According to McCredie, Canadian buyers are responsible nearly one-third of the Phoenix homes that sold for $1 million or more in the past year.
“The search is on for quality and location,” he said, and while there has been increase in such high-end sales in Canada (especially Whistler and Saltspring Isand) there are starting to take off south of the border.
“The U.S. recovery is already underway,” McCredie said, “and there are a lot of wealthy Americans.”
McCredie said Las Vegas – which has among the highest foreclosure rates in the U.S. – is now becoming a prime high-end housing market.
He points to the luxury condominiums in Las Vegas’ City Centre project, which was completed for $11 billion just as the condo market tanked. “Super luxury” suites in the Mandarin or Veer towers – part of the 57-acre development right on the famous Strip – are being sold from $500 per square foot, less than half the price of when they were finished four years ago by MGM Resorts.
” There is not a single crane working in Las Vegas now,” McCredie noted, which means that luxury competition is not in the cards.
Nat Bosa, president of Burnaby-based Bosa Developments, agrees the lack of competition represents an opportunity in prime U.S. housing markets, such as job-rich San Francisco and Seattle. “I gambled on a $300 million project in San Francisco, “Bosa said of his luxury Madrone condominium development which he began just as the 2008 recession gutted the U.S. housing market.
The Madrone is the only new condominium tower being built in California’s second largest city and one of the largest in the U.S. since 2008.
The Madrone’s 329 condos were selling for $900 a square foot when pre-sales started four years ago in the Mission Bay district. Now rebranded, they are priced from $710 to $750 per square foot, with the average home selling for around $725,000.
When Bosa re-launched pre-sales last year, 49 units sold within weeks and the project now has 120 sales with 40 pending.
Bosa said San Francisco buyers are much different than those at his Vancouver projects.
“Young people are coming out of school [in San Francisco] and starting at Google and Apple at $120,000 a year. A huge percentage of buyers are making $250,000 per year. In Vancouver we don’t have a large group of workers making a lot of money.”
For a full report on the U.S. housing scene, see the May issue of Western Investor
