When I first started doing real estate, I was in awe of the luxury market. To me, luxury was defined as $1 million-plus homes that are currently on the market.
Truth be told, many areas in the United States have a median price point over $1 million, so how can that be the definition of luxury?
There are two different methods for calculating the luxury price point in your area. You might choose to do an entire county, specific town or area.
Luxury home image via Shutterstock.
1. Top 20 percent price point of current listings on the market
Look through your MLS system and do a general search to see how many listings are currently active.
Multiply that number by 0.2.
Subtract that number from the total listings, and you will be given the number of the listing that defines luxury.
For instance, there are currently 1,662 active listings in Washington County, Utah. I multiplied that number by 0.2 and got 332.
I sorted the MLS listing by descending and went straight to MLS 332. That price point was $499,900.
So, according to that formula the defined luxury price point in southern Utah is $499,900.
2. Top 10 percent price point of all sold in a 12-month period
Look through your MLS system, and do a general closed search to determine how many homes sold in the past 12 months.
Multiply that number by 0.1.
Subtract that number from the total listings, and you will be given the number of the listing that defines luxury.
For instance, over the last year there have been 7,507 closed homes in Washington County, Utah. I multiplied that by 0.1 getting 750.
I had to do some adjustment because there were 200 homes sold in which the agents did not disclose the purchase price. (This, by the way, has been changed, and now it is mandatory to disclose purchase price.)
I sorted the MLS closed by descending and went straight to MLS 750. That price point was $445,000.
So, according to that formula, the defined luxury price point in southern Utah is $445,000.
It might surprise you what is luxury in your area. Try it.
Please share the luxury price point in your area and anything you learned through the process in the comments section below.
Melinda Goodwin is Luxury Home Division director with Re/Max First Realty in St. George, Utah. Follow her on Twitter or Facebook.
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