Sales of DFW homes costing $1 million or more boomed last year thanks to increasingly confident consumers and an influx of out-of-state buyers. That’s the view, at least, of luxury-home Realtor Erin Mathews, a principal at the Mathews Nichols Group in Dallas. Mathews, who’s been described as one of an “elite circle” of Dallas agents, specializes in homes in Highland Park, University Park, Preston Hollow, and Uptown. We talked with her Tuesday by phone.
Glenn Hunter: A report released Monday by the Texas Association of Realtors said that sales of Dallas-Fort Worth luxury homes increased by 22 percent between January and October 2013 over the previous year. Have you been seeing similar results?
Erin Mathews: Luxury lot sales in Highland Park and University Park—those lots in the $1 million to $3 million range—have just gone crazy. In 2013 there were more sales of those than I’ve ever seen. It’s an extremely active segment of the market. There also are many sales of lots costing $5 million or more. You’re seeing a lot of new construction on those lots, especially in the Park Cities—just an enormous building boom.
What’s your definition of a ‘luxury lot sale’?
I’m talking about homes that are being sold, and then their lots are immediately ‘scraped’ to make way for new construction. These homes are being torn down left and right. Last year I participated personally in maybe nine or 10 of these situation, with homes that I sold over $1 million eventually being torn down. Most years I only see two or three teardowns among my sales.
What’s the connection between “luxury lot sales” and the new-building boom you mention?
So many older homes costing $1 million or more are being torn down to make way for new custom homes, especially if they’re located on a good-sized piece of land. Along with this in the Park Cities we’re seeing a move back to the ‘speculative’ building part of the high-end home market. Spec builders are entering the market again after being gone for two or three years. They’re back with a vengeance! That’s because land has become so valuable, and there’s so much demand for new construction in these neighborhoods.
Why are there so many teardowns these days?
Many times a buyer will purchase a home thinking that it can be renovated. But then he or she discovers that the home is not feasible for renovation. Especially those homes that are older than 10 years. The reality is, you can’t buy a lot in Highland Park for less than $1 million now that you can put a luxury home on. And in these high-end neighborhoods, $1 million just buys you the land. There are very few vacant lots in these established close-in neighborhoods. In the suburbs, it’s a different situation. But Highland Park, University Park are surrounded by the city of Dallas. There’s never going to be any more land in those neighborhoods. And as I said there is a big desire for new construction.
Do people just want ‘something new,’ as opposed to something that’s already there?
It is a different mentality, to a certain extent. With today’s advanced technology, with today’s desire for energy efficiency, with people being so tech-savvy, even the ‘purists’ who love and appreciate older homes—the wonderful architecture—sometimes find that to retrofit an older home is very costly. Even though we’re seeing heightened appreciation for architecture and homes that are 50, 60, 70 years old, renovation and preservation is so much more costly than just scraping the lot and building new.
So why are luxury-home sales rising overall?
The consumer is clearly feeling more confident these days. Not only is the end user feeling more confident, but investors in these luxury homes [and investors who are financing the luxury homebuilders] are feeling confident enough to jump back into the pool again. Most consumers prefer to buy an existing home, a spec home, rather than to build one themselves, which [involves a lot of hassle and] can take as long as two years.
Did you personally experience this boom in 2013?
Yes, I had my best year ever, in terms of the total value of homes sold, at $90 million. My previous best year was in 2007. The $90 million represented 35 transactions. My smallest sale was a $681,000 condo, and my average sale was $2.6 million. I had what I believe was the year’s largest sale in University Park—a $16 million-plus sale on Hunters Glen. That was a home that was originally built in 1927 but recently was renovated. I also had the highest sale in Preston Hollow—a 10,000-square-foot home that was built in 2005. It sold for $7.5 million.
What other homebuying trends are you noticing?
We’re seeing a large number of buyers from out of state—from Chicago, from Connecticut, from Washington D.C., and especially from California. They’ve been coming here for several years now, but in 2013 it was the most I’ve ever seen. They are coming in droves. They think they will be getting a lot more house for their money here, but, if they’re buying in the Park Cities, that’s not the case. In many cases they can’t get even half of what they were expecting.