Addressing the Marketplace

It was my pleasure to be asked to address the Luxury Home market place in Victoria. Over the last nineteen years of my real estate career, I have had the privilege of marketing some of the finest homes in our fair city.

To begin I believe it is important to define "Luxury Homes" for the purpose of this article. The term "luxury" as defined in the dictionary is: "choice or costly possessions or surroundings, desirable for comfort or enjoyment.. but not essential." In advertising we often see this term greatly misused as a general catch all for any property of above average expense.

The true luxury home is 100% committed to the highest of quality in every aspect of its presentation. From the execution of the architectural plans through to the completion of the highest standards of construction, luxury homes are finished to the final detail with the ultimate in decor and the finest of available materials.

These homes allow their owners to truly luxuriate in a self-contained, private and secure environment. It is common to find extra amenities included such as swimming pool, steam bath, tennis court, media room, staff accommodation, guest accommodation, wine cellar, fitness center, moorage, or possibly an equestrian center. The list, as they say, is endless.

Recently this advertisement appeared in an International publication called LE featuring luxury homes in the United States: "A sumptuous setting highlighted by seven Fountains and 250 towering palms transforms a Paradise Valley estate of almost two acres into an extraordinary private estate. The 8,943 square-foot main residence features a living room with two water sculptures, a gallery of three aquariums, and large chefs kitchen. To the east, a 3100-squarefoot guesthouse brings the total number of available bedrooms to ten. Shimmering, as jewels on the ground, are three heated pools; one for diving, another for wading, and a third with built in bar stools. A spa adjoins the diving pool, and another serves the master suite. A lighted sports court awaits lively competition. Thus spectacularly equipped, and secured by electronic gates and television monitors, the estate stands ready to become either a luxurious personal realm or the ultimate corporate retreat. Asking price $1,950,000." This is unquestionably a luxury home.

Luxury homes exist in all cultures and embrace many tastes, styles, and settings. Although each culture has their own expression of luxury, the universal common bond is that these homes are "rare, unique, expensive, and of world class quality."

Upon seeing the advertisement in LE for something so lavish in description and content, I was somewhat amazed to see the offered price at $1,950,000. Sale prices in Victoria in fact have exceeded this figure for some of our premiere luxury residences. Considering our population is relatively small, approximately 370,000 residents in Greater Victoria, we have achieved prices often associated with cities with a population of a million or more. It is important however to keep a clear perspective on this activity level, relative to the rest of the Victoria market.

For this reason, as a point of reference, I have cited the historical database on the Victoria Real estate board mls system from January 1, 1995 to the present date. The total number of residential sales over $1,000,000 was recorded at 24 for the past three and one half-year period. Five of these 24 homes actually sold for prices higher than $2,000000,

In order to differentiate between expensive homes and luxury homes, it should be noted that only eight of these sales would qualify as luxury residence sales. The remaining 16 sales represent homes with different degrees of luxurious finishing and in some cases were simply building sites, ready to be an ideal setting for a luxury residence.

The total number of listings available at the million plus range on the Victoria Real Estate Board at this point in time is 24. Possibly the most enlightening data of these statistics is the 93 expiries that occurred in this same time frame, to demonstrate that only 38% of the available product in any given year, on average, has sold. The reasons are many, from shortage of buyers who can truly afford these prices, to the present global economic condition.

Overpricing is often a common problem in the marketing of these properties as the seller rarely feels there is a direct comparable and in many cases that can be true. In this particular grouping of sales, none of the properties could be considered direct comparables in terms of the residence.

In many cases however they were all on waterfront, which is a natural criteria for luxury residences on an island. Only two of the eight sales were not on waterfront, and only 3 of the total 24 had settings other than waterfront. These properties can take one to two years to find the right buyer who is prepared to offer their opinion of value. If a property is truly special however, the buyers will always be there, but definitely not at any price. Buyers in this price range are not only educated and astute, but they are thorough in their research and have access to all sales data.

The luxury homebuyer of the future will be prefeffing a smaller residential size, without any wish to compromise the excellence of construction or the lavishness of the interior finishings. The large numbers of retirees coming to Victoria want to travel less and treat themselves well. The luxury residence will always be an ultimate and timeless goal.

In closing I would like to say that I feet the luxury home market will continue to flourish in Victoria. Our spectacular scenery, our lush garden environment and clear skies, and temperate climate, will continue to draw people from across Canada, Europe and the United States. Our exclusivity and our adjusted dollar combine to make these residences extremely appealing to those who travel the world and appreciate Victoria as a rare jewel. The presence of the Victoria International airport helps as well! I have noticed a tremendous increase in Internet traffic to my web page, and naturally this is source which will continue to introduce us to the world.

If you wish any further information on available properties or clarification of points made in this article, please do not hesitate to call Leslee Farrell, Newport Realty 385-2033.