A red-hot auto industry, bullish stock market and steadily recovering home prices ignited the top end of the real estate market last year in suburban Detroit.
The number of home sales in the lofty $1 million-plus category hit a new tri-county high in 2013 as more C-suite executives moved up in property and out-of-staters transferred in for high-paying jobs, real estate brokers say.
There were 210 new and existing residences that sold for $1 million and above within Oakland, Wayne and Macomb counties, according to data compiled by Farmington Hills-based Realcomp, a multiple listing service. That is a 42% increase from 2012, which itself was a surprise boom for million-dollar homes sales after several molasses-like years during and after the housing collapse.
“We hadn’t seen that good of a year in a long time,” Kay Agney, broker and owner of Higbie Maxon Agney in Grosse Pointe Farms, said of 2013. “It was like the good-old days.”
It was a solid year across all price points, with total sales in the tri-county region rising 26% from the previous year, according to a review of property transfer records by Bloomfield Township-based Advertising that Works, which tracks home sales.
The median home sale price was $116,250, up 29% from 2012 but still about 25% off the metro Detroit region’s price peak in 2005 and early 2006. As a whole, prices in metro Detroit were back to spring and summer 2008 levels.
Why the big rush for $1 million-plus homes? Real estate experts attribute the boom in part to the return of strong profits in the auto industry, which translate to greater confidence and job security among the region’s executives, even those who aren’t directly in the car business.
Doctors, lawyers, business owners and other top professionals were also feeling buoyant from the improving economy and, in many cases, were lured into buying by the still-low mortgage rates that most economists expect to continue rising this year.
What’s more, many of these high-net-worth individuals were in positions to benefit from the big stock market gains of 2013.
“They had the money all along, but once they see their portfolios and their brokerage accounts building back, they feel more comfortable to spend, like anybody,” said Todd Emerson, owner of Sterling Development, a Birmingham-based luxury homes builder that is experiencing a jump in business.
Another key factor in high-end home sales was the overall market’s price appreciation. Would-be buyers found it easier to sell their current home at a price they could accept.
Kelly Sweeney, CEO of Troy-based Coldwell Banker Weir Manuel, said the new buyers of $1 million-plus homes are in many cases living in $600,000 to $800,000 properties. To move up, they need someone to buy their properties, oftentimes those living in $400,000 to $500,000 homes.
“It’s kind of trickled up through the market,” Sweeney said.
Despite the record number of sales of more than $1 million, agents say the prices that the highest-end homes are fetching are still about 20% off their peak of eight to 10 years ago.
Agent Ronnie Keating of SKBK Sotheby’s in Birmingham isn’t sure the market will ever return to those levels.
“The pricing today is more realistic,” she said. “No more, ‘Let’s put it on high and see what happens,’ because that’s ridiculous. There’s too much competition out there, and you would be wasting everybody’s time.”
Another top-of-the-market specialist, Katherine Broock Ballard of Max Broock Realtors in Birmingham, said it traditionally has taken close to two years or even three to sell a house at the high end of the area’s price range. So she was ecstatic to have clients receiving multiple offers last year on homes listed at $3 million and above.
“I am working on one where the list price is $5 million and I’ve had multiple offers on it,” Ballard said. “I had a gal in a $3-million home who ended up downsizing a little bit to a $2.5-million home. She sold her home in a few weeks. That’s just unheard of.”
She and other top brokers cite Birmingham as perhaps the hottest market to buy or build in among high-end clients.
“You’ll get a transferee and show them Northville and Novi, and we’re seeing that they gravitate to Birmingham,” Ballard said.
For Agney of Higbie Maxon Agney, 2013 was the first time since 2004 that she saw homes that weren’t on Lake St. Clair sell for more than $2 million.
One of her lakefront properties that did go was a seven-bedroom English manor home in Grosse Pointe Park with high ceilings, dark wood paneling and a swimming pool. The house sold for about $300,000 below the $2.9 million asking price, she said.
New home construction had a significant role in the strong sale numbers, particularly among younger buyers.
There were 34 permits issued in the tri-county for new homes valued between $1 million and $5 million, up from 22 such permits in 2012, according to the Home Builders Association of Southeastern Michigan. Nearly all of the upscale building activity was in Oakland County.
“New houses were doing great,” said Keating of SKBK Sotheby’s. “We really couldn’t build them fast enough.”
Emerson, the Birmingham-based luxury homes builder, said his business saw a big jump in both new construction as well as major renovation work to existing $1 million-plus homes.
He is particularly proud of a $3-million residence in Birmingham that his firm built and sold to a local couple. The house has five bedroom suites, a full-service nanny apartment, an exercise room, a bar with glowing onyx countertops and an elaborate industrial-themed playroom with catwalks and laser lights that took a team of carpenters five months to build.
His Sterling Development built three such multimillion-dollar houses in 2013 and is presently working on four more. After downsizing in the recession, his employee head count is now up to 16 — more than double what it was a year ago.
“We had a hell of a last half dozen years, so it’s been real refreshing,” Emerson said.
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