When Jerry Hux and his wife started thinking last year about downsizing from their Buckhead villa, they knew they had already missed their shot at getting a top price.
“We just didn’t pull the trigger, and then when the market was down we just decided to sit,” said Hux, who owns Beverly Hall, a high-end Atlanta furniture retailer and interior designer.
But after waiting several dismal months as the economy and financial and real estate markets showed near-record declines, the Huxes decided a recovery could be near. Last month, they put their Mediterranean-style, 6,000-square-foot-plus home on the market for $2.35 million.
Their timing could be relatively good, according to some market players’ thinking. Real estate agents and other professionals say they are seeing signs that a recovery may be on the way.
But it’s a gamble. The malaise hitting Atlanta’s tony neighborhoods has been deep, pushing hundreds of $1 million-plus homes into the market. As a result, many high-end sellers are now agreeing to steep discounts, and any significant recovery could be slow.
After several dismal months of inactivity, mansion shoppers started calling about three months ago, and more are buying their dream homes, say agents.
“I went six or seven months with no buyers. It didn’t matter what the price was,” said Travis Reed, a top agent at Harry Norman Realtors who specializes in high-end homes. But Reed said his sales jumped “way up” in June and he was still busy writing sales contracts in July, normally a slower month.
“Unless another shoe drops,” he said, referring to an unexpected shock to the economy, “it feels like the housing market is recovering, finally.”
More security
It that’s true, Atlanta’s mansion market may be reflecting the broader residential market, which has shown hints of recovery in recent months. National statistics released last week showed recent gains in terms of new and existing-home sales, new construction starts and average home prices. One measure of Standard & Poor’s Case-Shiller index released last week similarly notched a 0.3 percent increase in average home prices in Atlanta and similar increases in several other major cities in May.
Even with the uptick in sales activity and prices, however, it could be a long time before Atlanta’s jet-setters enjoy another spree of ever-expanding mansions and ballooning home values.
Plunging stock and real estate values have hit many millionaires, pushing many to downsize their housing ambitions. A recent study by New York-based Phoenix Marketing International showed that Georgia has 26,000 fewer millionaire households than it did in 2007.
“Even my uber-wealthy clients don’t feel a need for 10,000 or 12,000 square feet anymore,” said Reed. These days, he said, even customers who could afford much more than a $5 million castle seem to be focusing on smaller homes that they perceive as less risky investments. They’re interested in “more security and less square footage.” “I don’t think the high end will ever come back,” said Steve Palm, president of Marietta real estate research firm SmartNumbers, pointing to the recent clampdown on big executive paychecks at many firms. “It’s going to be tough to exercise the big options. It will be tough to get the big bonuses” to pay for big houses, he said.
Only 174 sales of $1 million-plus homes closed in the first half of this year in metro Atlanta, according to SmartNumbers. Annualized, that pace is about 60 percent lower than the peak in 2007, when metro Atlantans bought 907 such homes.
Boost from tax credit
Jerry Hux, 63, cited lifestyle changes as the main reason he and his wife, Anne, who are empty-nesters now, want to sell their home. They bought it 18 years ago and extensively remodeled it a decade ago.
“We just felt like it’s time to downsize and simplify,” he said. He hopes to build a future home somewhere in metro Atlanta that incorporates many of the finer touches of their current abode, such as copper gutters and granite counters. But it won’t be as big.
“We don’t have as much need for space as we used to,” he said.
First, though, they’ve got to sell their home on Wieuca Road, which Hux figures could have sold in the “high twos,” as in millions, a few years ago. He’s had two potentially serious tire-kickers so far. He says he’s not worried.
Real estate agents say current sellers have a few more things going for them now than a few months ago. New construction has ground to a halt, shutting off new additions to a flooded market. Existing inventory also has been somewhat dented by distress sales by struggling developers and some individual owners.
Meanwhile, the mansion market has been getting a bit of a boost from improved availability of jumbo-loan financing and a special tax break for first-time home buyers, some agents and lenders say.
“That has had some effect on the higher end,” real estate agent Leslie Ransom said of the tax credit up to $8,000, which ends this year. Ransom, an agent with Atlanta Fine Homes Sotheby’s International Realty who is handling the Hux’s listing, said the temporary tax credit has stimulated sales of lower-priced homes, which in turn has caused some home sellers to move up into the $1 million-plus range. The temporary tax break was part of the federal government’s economic stimulus package.
Sellers ‘more realistic’
Still, real estate agents and others said the biggest stimulus in the market this summer has been lower prices.
The volume of closings on local home sales rose in July for the first time in three years, said Palm, “but it’s just because the prices are so low.”
Some cash-strapped developers are selling new homes for as much as 40 percent off the original asking prices to avoid foreclosures, said Theresa Strait, an agent with Atlanta Fine Homes Sotheby’s. “What we’re seeing is a lot of price cuts,” she said.
The discounts by individual home sellers are more like 10 percent to 20 percent, but in some cases they’re also throwing in extra sweeteners that would have been unheard-of during the boom years. In one recent deal, the seller agreed to throw in a baby grand piano the buyer took a liking to, she said.
Ransom said she is working on one pending deal for a home in Brookhaven where a would-be buyer offered well below the $1.6 million price tag and “asked for every piece of furniture in the house.”
She thinks the seller and buyer will probably agree to a compromise, which is a good sign that the market is finally turning.
“I really do believe we have hit bottom,” said Ransom. “These sellers are being more realistic now.”
Mansion markdowns
Prices on many of Atlanta's $1 million-plus homes are dropping. Among them:
● Home Depot founder Arthur Blank’s Tuxedo Road mansion: From $10.9 million to $6.9 million.
● Windcrofte, a historic Buckehead home now owned by former gubernatorial candidate Guy Millner: From $13.9 million to $10.9 million.
● Former soap opera writers Bridget and Jerome Dobson’s Buckhead mansion sold in June for $10.5 million — a record for a local single-family home, but far below the original $16.9 million asking price.
● Dean Gardens, a 58-acre estate in North Fulton County, has been on and off the market for more than a decade at prices ranging from $20 million to $40 million. It went back on sale in June for $13.9 million.
Staff reports
How we got the story
This article was based on interviews with real estate agents, home owners and a lender involved in the metro Atlanta market for multimillion-dollar homes. We also reviewed home sales data provided by a real estate agency and SmartNumbers, a real estate research firm in Marietta.
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