We’re seeing mixed results in luxury home sales north of the city this third quarter. In Westchester, luxury sales, sales over $2 million, were down slightly; a very slow third quarter in Putnam and Dutchess (sales $1M and higher) contributed to a double-digit decline year to date.
“Recent reports indicate the housing sales nationwide are slowing because wage growth is not keeping pace with the increase in real estate prices. Our luxury markets do indeed appear to be slowing down, but lack of wage growth is not a factor for luxury buyers. In fact, the ten-year bull market created $18 trillion in wealth since the Standard & Poor’s 500 bottomed on March 9, 2009,” said Anthony Cutugno, Senior Vice President of Houlihan Lawrence.
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Despite these record-setting gains in the stock market and net worth, the luxury buyer north of NYC is defined by a cautious and restrained approach to real estate. They are reminded that real estate can decline in value, and the fear of overpaying is a primary concern. Luxury rentals have increased since last year and offer an easy wait-and-see solution.
The pursuit of value drives the purchase decisions of today’s buyer. They want a fair price that can be justified by comparable sales, and confidence in the property’s marketability should the need to sell arise. A surplus of luxury inventory justifies their caution: At the close of the third quarter, there were 467 luxury homes ($2M and higher) for sale in Westchester County and 57 homes in contract. In Greenwich, 317 luxury homes ($3M and higher) were for sale with 22 homes in contract.
Motivated sellers are paying attention to the importance of pricing and its outsized ability to attract the attention of buyers with a value-driven offering. Sellers who priced their homes ambitiously are reducing or withdrawing them from the market. In the third quarter, one out of four luxury listings in Westchester took a price decrease and sellers are lowering their expectations to meet the market.
Cutugno said the luxury market in New York City is feeling the same pricing pressure, however rising values the past several years have resulted in an overheated market that is now cooling down. “Buyers are wary of top-of-the-market pricing and sellers are responding in kind with a record number of reductions. We continue to monitor shifts in NYCs real estate market for additional insights into ours,” he said.
