In early November, FBI Director James Comey was in the headlines in Connecticut – not because of his involvement in the presidential election, but because of the price cutting he undertook on his luxury home in the Green Farms section of Westport.
Comey acquired the 3.17-acre, seven-bedroom, 2005-built property for $3 million in August 2010. Nearly five years later, he put the property back on the market with a price tag of nearly $3.4 million. However, more than a year passed and the property remained on the market. In early November, Comey cut the price down to $2.5 million – his fourth reduction in a span of 16 months.
Comey’s situation is hardly unique. Within Fairfield County and across the border in Westchester County, the luxury residential property market is facing more than a few challenges. According to third quarter data released by Douglas Elliman Real Estate, Fairfield County’s luxury residential market median sales price was $1.825 million, down 14.3 percent from the $2.13 million level one year earlier, while the luxury price threshold fell 11.3 percent to $1.3 million. In Westchester, the luxury residential market’s median sales price was unchanged on a year-over-year basis at $2.15 million while the luxury price threshold slipped 0.3 percent to $1.64 million.
“The third quarter was very, very uninspired,” stated Cynthia Lawrence, a Danbury-based Realtor with the Danbury office of Coldwell Banker Residential Brokerage. “It was very flat, and the days on market were extremely high, with a minimum of 150 days. I knew of a lakefront property that was on the market for almost over a year.”
“A lot of real estate people in the luxury market are starting to bring prices down a little bit,” observed Wayne Frankel, CEO and regional owner of Greenwich-based Exit Realty of Connecticut, who added that some homeowners in these suburban luxury markets are finding themselves in a losing competition with their Manhattan counterparts. “Homeowners see a boom in New York City and feel, ‘We’re outside of the city and the market should be similar.’ But it is different. People tend to overprice a bit and Realtors tend to bring their prices down.”
But that is not to say this market is a flat-out bust.
“The words I would use to describe the luxury sector are ‘realignment’ and ‘correction,” said Jim Gricar, director of sales at White Plains-based Houlihan Lawrence. “We’re on track to do more deals than in 2014, when the number of transactions were at their highest point.”
“We’re busy and had a lot of showings,” said Andy Todd, owner of Greystone on Hudson, a 100-acre gated luxury community in Tarrytown. “We had a strong end-of-year in 2016 and things are picking up for us. 2017 is going to be good.”
Of course, the old real estate mantra of “location, location, location” plays a key role in this market.
“Larchmont is solid as a rock,” said Gricar. “Rye, Scarsdale, southern Westchester – the most easily commutable towns. In Fairfield, Greenwich is a solid market. I’ve also seen a good number of luxury deals inked in Westport.”
“Upper Fairfield is doing really well,” said Hughes. “It has tons of buyers, but not enough property.”
And at least one real estate professional believes Connecticut is proving to be a cost-effective magnet in this high-priced market. “People looking to reduce their real estate tax rates are finding Fairfield more favorable than Westchester,” said Rob Johnson, an agent with Greenwich-based Halstead Property.
As for buyers, Hughes noted a trend that confounded the perception of older homeowners. “In the last six months, there have been people in their early fifties who, rather than downsize, want to upsize,” she continued. “I have people selling for $500,000 and are looking for a home at $1.2 million.”
Furthermore, many the luxury properties buyers in these counties are not looking for investment vehicles, but for a place to call home.
“Yes, there are people with second, third and fourth homes,” said Johnson. “But in Greenwich, the vast majority are seeking a primary residence. The demand comes from traditional families from New York City.”
Also exploring the market are a growing wave of people that would like to test the concept of suburban, high-end living without committing to an actual purchase.
“There are a lot of renters in the luxury market,” said Frankel. “This is due to some people not being able to sell their homes at the prices they want or as fast as they want. For people considering purchasing luxury homes, sometimes renting is another option on the way to homeownership – and with luxury rentals in these markets, you get the lifestyle associated with New York City while get a long more than you would get in the city.”
Gricar agreed with this observation. “Many people taking the first step into the northern suburbs like to rent,” he said. “They can rent houses to see if they like the housing market.”
But Gricar added that the Federal Reserve may soon be prompting renters to think a little more seriously – and swiftly – about home buying. “When interest rates rise, it will motivate many buyers to move forward on property in anticipation of rates going even higher,” he said.
Yet Frankel worried that a rate ascension could come with a lethal drawback. “If interest rates go up too much and too fast, it will hurt the market – and put the entire economy in a bind,” he said.
Still, Todd is not concerned that any rate hike will damage his operations. “Our prices start at $4 million and we generally have cash buyers,” he said. “Most of the people who can afford this type of home don’t need a mortgage.”