Low interest rates, increased consumer confidence move buyers to huge luxury homes

Posted on November 12, 2012

West Bloomfield — It’s hard to miss the 7,500-square-foot behemoth here at 5512 Essex Court.

The five-bedroom, five-bathroom structure stands out even among the neighboring mansion-like houses in the Wyndham Pointe subdivision.

An arch more than 20 feet high frames the brick main entrance, and cathedral-like windows accent a front room with a 24-foot-high ceiling.

The only thing missing from the outside are the entry steps. The home has been vacant for five years.

Custom builder Crystal Homes Inc. was poised to sell the property — and more like it — for more than $2 million before the housing market crashed, according to local real estate agents. As demand plummeted, workers packed their tools and left the home about 80 percent completed, said Timothy Gilson, a real estate consultant with RE/MAX Vision in Huntington Woods, who has listed the home for sale.

As the market recovers, Crystal Homes has priced the large luxury home at roughly half of its original price — a common practice for sellers in the $1 million-plus market during the past few years. It’s one of several luxury homes the builder plans to sell in West Bloomfield Township.

More luxury homes are going on the market in Metro Detroit as sales accelerate. Real estate agents have sold 114 homes for $1 million or more through the first nine months of the year — an increase of 37 percent from the same period a year ago, according to Farmington Hills-based multiple listing service Realcomp II Ltd.

The nine-month total of 114 already surpasses the annual total of $1 million-plus homes sold in the region since 2006, according to Realcomp.

‘Best we’ve done in years’

Historically low interest rates and increased consumer confidence are encouraging people to buy more luxurious homes, Gilson said, echoing observations by independent economists.

“When (buyers) see how much they can afford on a monthly basis,” he said, “they realize they can afford a whole lot more house.”

The four-county Detroit area luxury market has been slowly recovering since hitting bottom in 2008 with sales of 54 $1 million-plus houses. This year marks the first time since 2006 that sales have passed the 100 level.

As the Metro Detroit economy recovers, more buyers have jumped into the housing market during the past 15 months, according to Realcomp. Four-county sales have risen in 13 of those 15 months. In September, sales slid 1.3 percent because the inventory of homes listed for sale hit a record low.

“We’re doing the best we’ve done in years,” said Ronni Keating, a real estate agent with SKBK/Sotheby’s International Realty in Birmingham, whose company has sold 46 $1 million homes so far this year compared with 39 for all of 2011.

That’s what prompted Crystal Homes to put three properties on the market.

“Crystal Homes has been very patient waiting for the market to rebound,” RE/MAX Vision’s Gilson said.

“I’m happy to reveal a little hidden secret.”

But there’s nothing little about the homes. The arched doorways inside 5512 Essex Court, with handcrafted wood patterns and flanked by soon-to-be marble columns, lead to a multitude of rooms and a four-car garage that has space for eight vehicles if lifts are installed.

Upstairs, three rounded steps lead to the double-door entrance of the 900-square-foot master bedroom, which has space for a full bar, entertainment center, walk-in closets and a vast bathroom with showers, a Jacuzzi and fireplace.

The floors are still wooden and bare, but could quickly be laid with marble with the $300,000 allowance the owner has allotted for the buyers to finish the home, Gilson said.

“They’re building estate castles,” he said.

Move-in ready mansions

Some of the castle-like homes are already completed.

Shirley Thomas, a residential specialist with Real Estate One in Troy, has listed a home at 6087 Oak Trail that is completely finished — and has been since 2000. Originally used as one of Crystal Homes’ models, the 6,500-square-foot house also languished when the housing market crashed. The home is listed for $950,000.

The Oak Trail location is move-in ready. Even in the unfinished behemoths for sale, the buyer could be living in them within six months — something Gilson said is rare.

“To build your own custom luxury home could take one to two years,” he said. “I can’t think of any place in southeast Michigan where anyone can have this done (so quickly). It just doesn’t happen.”

Michael Martinez, The Detroit News